Following healthy YTD gains, Frontier (NASDAQ:FTR), Windstream (NASDAQ:WIN), and CenturyLink (NYSE:CTL) have seen their dividend yields narrow a bit, though they still remain substantial. Frontier now sports a 6.9% yield, Windstream a 9.9% yield, and CenturyLink a 5.9% yield.
At the midpoint of their 2014 free cash flow guidance ranges, Frontier and CenturyLink are respectively set to pay out 53% and 46% of this year's FCF through dividends. Windstream has forecast a 2014 payout ratio of 68%-78%.
Though it has the lowest yield, SA author Investec recently made the case CenturyLink is the best play of the bunch. The author observed CenturyLink has a lower debt/equity ratio and higher interest coverage ratio than Frontier or Windstream, and expects its sizable broadband, TV, and cloud/Web hosting investments to pay off.
All 3 companies are expected by the Street to see modest 2014 revenue declines, largely due to local voice disconnections. Frontier reports on Aug. 5, CenturyLink on Aug. 6, and Windstream on Aug. 7.