Alaska Communications Systems
5/7 Close: $2.30
Market Cap: $105 million
The idea of “local” telecommunications providers in Alaska is kind of laughable. The state is massive, so the remote regions are a long way from their nearest neighbors. But aside from the small-cap size and strange customer makeup for Alaska Communications Systems (NASDAQ:ALSK), it shares a lot with AT&T (NYSE:T) and other sleepy dividend payers in the sector. Revenue never really grows, but it never really drops significantly, either. Yes, Alaska’s telecom industry is more competitive than some regions, but that’s not saying much.
Of course, it’s worth noting that despite ALSK’s attractive dividend yield, the payout has actually declined after the company slashed its payout in 2011 from 21.5 cents quarterly to a mere 5 cents. Shares crashed from the $10 range at the start of the year to under $2.50 currently. However, the move was strategic, with an eye on the long term — freeing up nearly $30 million in cash flow annually for the Anchorage-based telecom to invest in its wireless infrastructure and growth in the enterprise segment. The yield is a nice 8.7% even after the cut, but obviously any further deterioration in share prices could offset that. And the dividend is anything but a sure thing after 2011’s cut. Keep in mind the $100 million market cap and measly volume of 600,000 shares daily could whipsaw you around, so always use a limit order when trading.