Windstream (WIN) boasts an absolutely ridiculous yield. The No. 1 dividend stock in the S&P 500 has a current yield of roughly 12%. Even junk bonds don’t throw off that kind of income — the yield on the Barclays Aggregate U.S. Corporate High Yield index is just 5.8%!
Of course, investors need that juicy yield to offset sluggish share performance. The stock is off 3% for the year-to-date.
The amazingly high yield also helps mitigate some of the risk associated with less-than-stellar operations. The regional telecom had a weak third quarter, hurt by the loss of digital TV and voice services.
True, the super-high dividend is Windstream’s claim to fame, but be forewarned that the company is highly leveraged and pays out more in dividends than it makes in earnings.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.