While the second-quarter earnings report from rural communications provider and Motley Fool Income Investor recommendation Citizens Communications (NYSE:CZN) was nothing to write home about, it did show the company making continued progress in penetrating its markets.

Revenue increased 14% to $579 million, with $83 million of this coming from newly acquired business Commonwealth Telephone. Net income came in at $40.6 million, well shy of last year's $63 million, which excludes a one-time gain from the liquidation of Rural Telephone Bank. Sales were partially impacted by seasonal trends that led to more access lines being turned off in the second quarter.

Investors reacted negatively to the news and sent the stock down more than 10% at one point in the day, as the market obviously expected more from Citizens. But the company hasn't backed down from cash flow guidance of between $500 million and $520 million for 2007, and it maintains its positive outlook. With the integration of Pennsylvania properties bought from Commonwealth Telephone going well, the company expects more opportunities for growth in the quarters ahead.

The word of the day for Citizens was "bundles," as integrated offerings of telephone, high-speed data, and DISH video programming service through a partnership with EchoStar (NASDAQ:DISH) helped retain customers and grow revenue through the quarter. Citizens has sold more than 23,800 DISH subscriptions so far this year, leading to a total customer base of 81,100. This success has helped the company keep cable operators such as Comcast (NASDAQ:CMCSA), Cox Communications, and Time Warner Cable (NYSE:TWC) from stealing customers, as well as hold off competition from telcos such as Verizon (NYSE:VZ), Qwest (NYSE:Q), and AT&T (NYSE:T).

Though Citizens tends to see a higher portion of disconnected lines this quarter as college students turn off the lights on campus and head home for the summer, cash continues to flow into the company at a solid pace. The firm reported $116 million in free cash flow for the quarter, and used part of the money to fund the dividend and repurchase $58.7 million of company shares. Citizens will also pay $62 million to acquire Global Valley, which will bring the company 15,000 more access lines in rural California counties and be accretive from the start.

So while Citizens didn't knock my socks off with this quarter's results, a 7.1% dividend yield and consistent cash flow more than make up for any mild disappointments.

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Fool contributor Dave Mock still finds himself on the edge of his seat awaiting the Sesame Street word of the day each morning with the kids. Dave is the author of The Qualcomm Equation. Citizens Communications is an Income Investor recommendation. The Fool disclosure policy's word of the day is ... tune in tomorrow to find out.