July 13, 2012
In the following video, Fool analyst Brenton Flynn discusses three reasons to sell Frontier Communications (Nasdaq: FTR ) as part of an ongoing series looking at both the bull and bear cases for different stocks.
Although the company lures many investors in with a juicy 10% dividend yield, that number actually poses a threat. Not only could Frontier easily slash its dividend in the near future, but it currently eats a large percentage of cash flow and restricts growth. Plus, Frontier is suffering from the growing popularity of mobile devices, which are encroaching on its core land-line telephone business. Lastly, a ton of debt currently weighs down the company. With little wiggle room to pay off that debt, Frontier could be in for more tough times ahead.
Bottom line, Frontier may not be the best bet for investors looking for yield. Instead, let me invite you to read the Fool's brand-new special report "The 3 Dow Stocks Dividend Investors Need." It outlines three market-leading companies with business models built for the long haul. It's also absolutely free, so just click here and get your copy today.