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High dividend yields are great in this low interest rate environment. They are also a great way of protecting a portfolio in the event of a market pullback or bear market. However, finding dividend yields that are both larger than the market average and sustainable for a long period of time, can be tough.

The most secure dividends in the market are from the market leaders and dividend aristocrats such as Coca-Cola (NYSE:KO) or IBM (NYSE:IBM) but these companies only offer average dividend yields.

So, what about the largest yields available in the S&P 500, are they sustainable?

Listed below are five companies that have some of the highest yields available in the S&P 500 right now. How sustainable are their dividends from their historic free cash flow and net operating cash flow?

Windstream Corporation (WIN)

Share Price

EPS

Dividend

Yield

Dividend Cover

$8.4

$0.2

$1.0

11.8%

0.2

Cash Flow Statement

$US millions

2010

2011

2012

Net Operating Cash Flow

1,090

1,230

1,242

Net Investing Cash Flow

-1,460

-652

-804

Cash Dividends Paid - Total

-464

-509

-440

Repurchase(Issue) of Common & Preferred Stk.

0

0

0

Issuance of long term debt (Reduction)

(174)

111

(108)

Net Financing Cash Flow

-657

-391

-549

Free Cash Flow

-1,020

184

-111

During 2012, Windstream's EPS were $0.2 and the company issued a dividend of $1. Although this dividend gave the company a very high yield of 11%, it also meant the company's dividend was not covered by earnings, which is a red flag!

That said, the company's cash flow looks ok. In 2012 Windstream had plenty of room to be able to finance its dividend from net operating cash flow, after the deduction of investing activities. The company also brought back some debt, which gave the group a negative free cash flow but should improve cash flow in future -- due to reduced interest costs.

Windstream has been able to cover its dividend payments from operating cash flow with room to spare over the past two years, therefore the dividend payout looks secure.

Pitney Bowes Inc. (NYSE:PBI)

Share Price

EPS

Dividend

Yield

Dividend Cover

$13.1

$2.2

$1.5

11.5%

1.5

Cash Flow Statement

$US millions

2010

2011

2012

Net Operating Cash Flow

952

920

439

Net Investing Cash Flow

-119

-155

-96

Cash Dividends Paid - Total

-301

-300

-225

Repurchase(Issue) of Common & Preferred Stk.

-88

13

6

Issuance of long term debt (Reduction)

(170)

(50)

(521)

Net Financing Cash Flow

-579

-455

-777

Free Cash Flow

530

464

85

Pitney Bowes is able to cover its dividend payout from EPS one-and-a-half times. Furthermore, the company has a free cash flow, excluding debt reduction of around half a billion dollars, which is enough to cover the dividend payment three times.

Overall, looking at Pitney Bowes' cash flow I would say the dividend is safe.

Frontier Communications Corporation (NASDAQ:FTR)

Share Price

EPS

Dividend

Yield

Dividend Cover

$4.0

$0.2

$0.4

10.0%

0.4

Cash Flow Statement

$US millions

2010

2011

2012

Net Operating Cash Flow

1,220

1,570

1,162

Net Investing Cash Flow

-773

-762

-526

Cash Dividends Paid - Total

-530

-746

-300

Repurchase(Issue) of Common & Preferred Stk.

0

0

0

Issuance of long term debt (Reduction)

(7)

17

16

Net Financing Cash Flow

-555

-735

141

Free Cash Flow

114

2

249

On the face of it, it would appear Frontier is not able to sustain its dividend. Indeed, Frontier is only able to cover half of its payout from EPS.

However, once again the company's cash flows tell a different story. Frontier has a positive free cash flow and plenty of room for its dividend -- although not enough free cash to start buying back debt.

For the past three years Frontier has been able to cover its dividend from free cash - with room to spare.

Exelon Corporation (NYSE:EXC)

Share Price

EPS

Dividend

Yield

Dividend Cover

$30.6

$1.4

$2.1

6.9%

0.7

Cash Flow Statement

$US millions

2010

2011

2012

Net Operating Cash Flow

5240

4850

4470

Net Investing Cash Flow

-3890

-4600

-3320

Cash Dividends Paid - Total

-1400

-1400

-1226

Repurchase of Common & Preferred Stk.

-48

0

0

Issuance of long term debt (Reduction)

(391)

571

688

Net Financing Cash Flow

-1750

846

-548

Free Cash Flow

529

-582

1010

Exelon is not able to cover its dividend payments from its EPS. In addition, the company's cash flow after the deduction of investing activities is not enough to cover dividend payments and has not been enough to cover the payments since 2010.

It appears that Exelon is issuing debt to sustain its high dividend payout. As a result Exelon's high dividend does not look sustainable.

Lorillard (NYSE:LO)

Overview

2012 EST.

Share price

EPS

Dividend

Yield

Dividend Cover

$40

$2.8

$2.2

5.5%

1.3

Cash Flow Statement

$US millions

2010

2011

2012

Net Operating Cash Flow

1090

1180

1170

Net Investing Cash Flow

-40

-50

-209

Cash Dividends Paid - Total

-645

-726

-807

Repurchase of Common & Preferred Stk.

-716

-1580

-573

Issuance of long term debt (Reduction)

987

741

494

Net Financing Cash Flow

-372

-1560

-875

Free Cash Flow

406

404

289

The overview of Lorillard looks ok. The dividend is covered but only just. Looking into the cash flow of LO the dividend payout is well covered. However, the stock buyback the company is undertaking to improve EPS is pushing the firm to issue new debt to cover these buybacks.

Overall

Despite most of these companies having poor dividend coverage from EPS, they are actually all able to cover their dividends from the proceeds of their operating cash flow, net of investing activities - all of them apart from Exelon, who has not been able to cover its dividend from its cash flow since 2010 and has been borrowing to maintain the payout.

Source: Can These High-Yielding Stocks Support Their Dividends?