Dividend Yield: 8.8%
Float Short (as of July 31 data): 23.5%
“Shares have underperformed handily in 2013, and barring a buyout from a bigger telecommunications company, it’s clear FTR has little to offer beyond its dividend yield.”
Unfortunately, that dividend yield looks shaky as well. While FTR has robust operating cash flow, the company’s cash and equivalents have dwindled from more than $2 billion in September 2012 to roughly 25% of that as of the most recent quarter.
Plus, while Frontier has paid a dividend since 2004, what began as a 25-cent quarterly payout was decreased in 2010 and again in 2012 to just a dime every three months. And that might not even last, considering at its current rate, FTR will pay out 40 cents per share in a year in dividends, but it’s only projected to earn 24 cents per share in 2014.
Even past the dividend, it’s easy to see why the bears are circling. Frontier’s revenue has fallen for the past eight quarters, and earnings are on track for an ugly 15% haircut for this year. Unless you really believe a buyout is coming, I’d stay away.