With rapidly changing technology and intense competition, the telecommunications market is notoriously tough and cost-sensitive.
For rural telcos such as Motley Fool Income Investor pick Citizens Communications
Citizens' revenue in the fourth quarter grew 14% to $577.2 million. The top-line growth came from two recent acquisitions and increased revenue from data and Internet services that offset losses in basic access line services. Net income dropped 8% from last year, to $59 million, though, as higher operating expenses, as well as tax expenses, hit the bottom line.
To keep customers from joining competitors such as Verizon
The softening economy and rising costs that Citizens bears in order to offer superior customer service have weighed on shares recently, as the stock sits more than 20% lower than six months ago. To take advantage of this, the company authorized a $200 million stock buyback plan for the next year.
Combine the buyback with projected 2008 cash flow of $450 million to $475 million and an 8.7% dividend yield, though, and you get a company that pays investors to hold the stock. And although Citizens isn't the most exciting growth business, strong management with a commitment to realizing value for shareholders is enticing.
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Fool contributor Dave Mock is a rural kind of guy living in a suburban world. He owns no shares of companies mentioned here. Dave is the author of The Qualcomm Equation. Sprint Nextel and Dell are Inside Value recommendations. Dell is also a Stock Advisor recommendation. The Fool's disclosure policy comes bundled with a free shoeshine.