Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Windstream Corporation (WIN), Frontier Communications Corp (FTR): Three Reasons This Company Is Full Of Hot Air

Page 1 of 2

It’s appropriate that Windstream Corporation (NASDAQ:WIN)  has the word wind in its name, because to be blunt, this company is full of hot air. When a company pays a yield of more than 12%, investors may lose sight of the challenges facing the business. While no business is immune to competitive pressures, Windstream Corporation (NASDAQ:WIN) faces challenges of its own making. The truth is, this company is slowly spending itself into oblivion.

Windstream Corporation (NASDAQ:WIN)

A tough business with huge competition
Unless you live under a rock, you probably know there are just a few companies that want your money when it comes to telephone, high-speed Internet, and video (i.e. television) services. In most areas the competition is fierce, but limited to just a few players.

Local telecommunications companies like Windstream Corporation (NASDAQ:WIN), Frontier Communications Corp (NASDAQ:FTR), and CenturyLink, Inc. (NYSE:CTL), all have similar challenges. Each company is trying to grow its high-speed Internet and video offerings at a rate fast enough to offset declines in their traditional voice services. To attract investors, each company pays a relatively high-yield.

On the other side of the coin, you have larger players like Verizon Communications Inc. (NYSE:VZ). The company not only competes with the local guys for telephone, video, and Internet access, but of course also has a huge and growing wireless business as well. While Verizon Communications Inc. (NYSE:VZ) doesn’t pay as high of a yield as the rest, I think few would argue that Verizon’s dividend is far safer than their smaller competition.

The difference between an opportunity and hot air
There is no doubt that investors can benefit from a nice dividend yield, as studies have shown that dividends can provide almost half of a stock’s total return. However, a dividend is only as attractive as the company writing the checks.

Anyone who has ever tried to work with a budget understands the challenges of having to make payments on a debt. Imagine if your debt payments took all but $0.29 of each dollar you made. In essence, this is the situation Windstream Corporation (NASDAQ:WIN) finds itself in, and the first reason the company’s dividend promises are just hot air.

In the last quarter, the company used 71.15% of their operating income to meet interest expenses. By point of comparison, Frontier Communications Corp (NASDAQ:FTR) used 62.57% of their income, CenturyLink, Inc. (NYSE:CTL) used 45.45%, and Verizon used just 7.84%. With such a large amount of money being used on interest payments, investors should correctly question if Windstream Corporation (NASDAQ:WIN) can afford the current dividend.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!