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5 High-Yield Companies To Avoid

Published Mon, 10 Apr 2017 10:43:52 -0400 on Seeking Alpha

When looking at high-yielding companies to invest in, investors should look at several things to avoid being caught in a value trap. First, the company should be growing in terms of revenue, earnings, and margins. Second, the company must have a healthy dividend payout ratio. Ideally, I prefer companies with ratios below 50%. A negative ratio or a ratio above 100% raises a red flag. Third, the company’s free cash flow should be growing. Also, the company should be in an industry that is growing. In this article, I will highlight five high-yielding companies that investors should avoid.
Frontier Communications (FTR)
FTR has been under siege, with its stock trading near its all-time low. Investors are worried that a dividend cut is imminent. In February, I warned income investors looking for growth to avoid the company because of this issue. Earlier on, in November, Moody’s had downgraded the company’s credit rating to B1 status. Frontier faces several challenges. It has about $17 billion in debt, and its $10 billion acquisition of Verizon’s (VZ) California, Texas, and Florida (CTF) wireline operations is not working out. At the time of acquisition, CTF had 3.3 million voice connections, 2.1 million broadband connections, and 1.2 million FIOS voice subscribers. Unfortunately, most of these subscribers had stopped paying for the services. In July, FTR started a cleanup to weed out the non-paying subscribers. This process is both expensive and time... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
FRONTIER COMMUNICATIONS 2.59   0.0 -19.38 2.40 93.02
STONEMOR PARTNERS L.P. 2.45   0.0 0.00 0.00 52.38
STAGE STORES 0.79   0.0 -2.66 0.20 22.60
CATO 13.53   18.3 0.74 1.32 9.39
GUESS? 21.63   0.0 -0.12 0.90 4.09

FRONTIER COMMUNICATIONS - FTR
FRONTIER COMMUNICATIONS - FTR  


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