The search for higher yields is driving the biggest rally in seven years for telephone stocks,...


The search for higher yields is driving the biggest rally in seven years for telephone stocks, despite lagging profit forecasts for the sector. Telecoms account for five of the 10 largest dividends in the S&P 500 and yield 5.45% as a group. Among individual companies: FTR, 8.94%; WIN, 8.24%; CTL, 7.3%; T, 5.96%, VZ, 5.94%.

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  • davidingeorgia
    , contributor
    Comments (2661) | Send Message
     
    Completely understandable that investors gravitate toward something that at least *looks* as if it might make owning it worthwhile, but beware some of the dividend yields in this space, especially Frontier's. (I just exited a long term position in FTR in the last couple of weeks because it doesn't look like the company can maintain the dividend at anywhere near the current level.)

     

    Windstream, CenturyLink (including Qwest since Q shares are shortly going to turn into CTL shares), AT&T and Verizon all look fairly safe, though. As safe as anything else these days, at least. Even with a hike in the tax rate on dividends, those will still earn an attractive yield.

     

    Disclosure: I'm long WIN, Q, T and VZ (and more comfortable about those than a lot of other stuff I have in the portfolio, but all normal cautions apply about owning them yourself).
    11 Oct 2010, 02:56 PM Reply Like
  • David Jackson
    , contributor
    Comments (1279) | Send Message
     
    There's a good discussion of the "flight to yield" in this article and the comments on it -- worth reading: seekingalpha.com/artic...
    11 Oct 2010, 04:44 PM Reply Like
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