Nine High Yield Telephone Stocks Calling

If you are looking for an industry that has been depressed, in a 'relatively stable' industry, provides steady dividends, and pays a high yield, you might want to take a look at the telecommunications industry. Many of these companies provides services to small towns and rural areas.

All of the following companies have market caps greater than $400 million, P/E ratios less than 40, and PEG ratios less than 9 [for some reason, PEGs are much higher on telecom stocks than other industries], and pay dividends. The huge telecom companies, such as Verizon (VZ) and Sprint Nextel (S) have been excluded from this list.

• Consolidated Communications Holdings Inc. (CNSL) provides telecommunications services to customers in Illinois, Texas, and Pennsylvania. The stock has a P/E of 39, a PEG of 3.57, and pays a yield of 10.3%.
• Citizens Communications Co. (CZN) is based in Stamford, Connecticut and provides telecommunications services to small and medium-sized towns and to rural areas. The stock has a P/E of 19, a PEG of 4.54, and pays a yield of 8.7%.
• Iowa Telecommunications Services Inc. (IWA) provides telecommunications services to both residential and business customers throughout rural Iowa. The stock has a PE of 24, a PEG of 6.54, and pays a yield of 8.4%.
• Windstream Corporation (WIN) provides local telephone, high speed Internet, long distance, network access, video and wireless to rural communities. The stock has a PE of 7, a PEG of 4.1, and pays a yield of 7.6%.
• Alaska Communications Systems Group Inc. (ALSK) provides wireline and wireless integrated telecommunications services in the state of Alaska. The stock has a PE of 4, a PEG of 8.55, and pays a yield of 6.9%.
• Qwest Communications International Inc. (Q) is a Denver, Colorado-based provider of voice, data, Internet, and video services. The stock has a P/E of 3, a PEG of 4.8, and pays a yield of 6.7%.
• Embarq Corp. (EQ) is a Kansas-based company that provides provides local and long distance voice telephone services, high-speed Internet, satellite video, and wireless services. It has 1.3 million Internet subscribers. The stock has a P/E of 10, a PEG of 4.64, and pays a yield of 5.8%.
• NTELOS Holdings Corp. (NTLS) provides wireless and wireline telecommunications products and services to customers in Virginia, West Virginia, and nearby states. The stock has a P/E of 38, a PEG of 1.58, and pays a yield of 2.9%.
• Centurytel Inc. (CTL) is a Monroe, Louisiana based provider of local and long distance voice, Internet access, and broadband services. The stock has a P/E of 9, a PEG of 1.97, and pays a yield of 0.8%.

Disclosure: The author has owned WIN for a while in a retirement plan.

Comments

[tk77mann:]

I think the best of these have cash flows that cover well the dividends and CapEx spending. Some of these companies are borrowing to pay the dividends so unless their revenues increase dramatically (tough because of the business they are in and the recession), it is probably better to be in the ones that are very cash flow positive (EQ, WIN, FTR, etc.)

2008 Dec 11 11:53 AM

[lakeside:]

Any update on your thoughts six months later?

Jul 17 07:52 PM