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2 Double-Digit Yielders to Buy, 2 to Avoid

High yields means high risk, but two stocks may be worth the gamble

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Portugal Telecom

Portugal Telecom 185Dividend Yield: 14%

Portugal Telecom (NYSE:PT) would scare me off if the company only handled telecommunications in Portugal. Luckily, it provides all kinds of infrastructure and communications services in emerging markets across Asia, Africa, and most notably, booming Brazil, so the stock has lots of potential.

However, I’m not sure the 14% dividend is sustainable.

Last year, the company generated net income of $304 million, and free cash flow of only $75 million — but paid out $847 million in dividends. That was down from $1.56 billion in 2011 and $1.94 billion in 2010. The company has $4 billion of cash on hand, but this is a capex-intensive business.

Sorry, but if the dividends are falling, not rising, I’m staying away.

Article printed from InvestorPlace Media,

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