5 Extreme Dividend Stocks with Huge Upside

3. Lumen Technologies (NYSE:LUMN)

No of HFs: 31

Total Value of HF Holdings: $762 Million

The third extreme dividend stock with huge upside is Lumen Technologies. The company was formerly known as CenturyLink and they rebranded in September 2020. LUMN offer communications, network services, security and cloud solutions. They are ranked 143 in the Fortune 500.

The top hedge fund holder of this stock is Mason Hawkins’ Southeastern Asset Management, which had over $635 million invested in the stock at the end of September. An insider purchased 265 shares at around $10. The stock has remained the same since then. Here is what Southeastern Asset Management said about LUMN in a 2019 investor letter:

CenturyLink (-19%,-1.72%), the fiber and telecom company, was the primary detractor to first quarter returns after a dividend cut. We were disappointed by that decision and filed a 13-D to enable us to become more active in the investment through seeking to improve the board, encouraging opportunistic asset sales and exploring creating tracking stocks for the company’s two segments. Private-market transactions of assets comparable to some of CenturyLink’s (CTL) fiber assets have been over 15X EBITDA, far above CTL’s depressed 5X EBITDA stock price. In addition to monetizing some of this fiber, separating the enterprise and consumer segments into distinct tracking stocks could help highlight the values and different opportunity sets for both. We believe that adding board members with experience in fiber and financial transactions can bring additional capital allocation discipline to drive value recognition. We maintain our support for Jeff Storey and his team operationally even while disagreeing about some capital allocation items. Storey bought $1 million in shares personally in the quarter, and CFO Neel Dev, as well as multiple directors, also increased their ownership of the stock.