Daily dividend news for investors in dividend stocks

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 1.15   0.0 -58.14 2.40 201.68
STONEMOR PARTNERS L.P. 1.39   0.0 -2.69 0.00 102.33
CATO 17.65   12.8 1.38 1.32 7.91
STAGE STORES 0.83   0.0 -3.89 0.05 6.15
GUESS? 18.93   99.6 0.19 0.45 2.39


Older articles featuring Frontier Communications (FTR):
Nicholas Ward's Dividend Growth Portfolio: January 2020 Update
Swapping Apple For Apple - October Dividend Portfolio Update
Uniti Dividend Is Likely To Be Suspended
Nuveen Short Duration Credit Opps JSD: 7.85% Yield Plus Protection From Higher Rates At An Anomalous Discount To NAV
General Electric Company: How Safe Is Your Retirement Income From a Dividend Cut?
High Volatility? Buy This Stable Monthly Dividend 6.8% Yield CEF
HYG And U.S. High-Yield Market Outlook: Week Ending September 16, 2018
Traders Beware: Potential Buying Opportunity In A Leveraged Bet On High Yield
Is 15% Yield To Maturity Worth The Risk For Frontier Communications 2025 Bonds?
Frontier Communications: No Dividend Needed