Dividend champion Frontier Communications
After completing a bet-the-farm acquisition of rural accounts from Verizon
And so we arrive at this morning's second-quarter report. Sales more than doubled year over year to $1.3 billion, while earnings fell by 8% to $32 million, or by 45% to $0.06 per share when you account for the massive dilution that came with the Verizon deal a year ago. All of this was in line with Wall Street estimates, but investors weren't impressed; shares swooned as much as 8.1% on the news before climbing back to a less preposterous fall.
I don't quite see why you'd hate this report. CEO Maggie Wilderotter noted that cost savings from the integration of Old Verizon and New Frontier is running ahead of schedule, and she increased her annualized savings target from $550 million to $600 million. With $231 million of free cash flow in the quarter, the dividend payout ratio landed at 77% -- within spitting distance of last quarter's 74% payout. Let me remind you here that the astronomical payouts are expected to trail off in coming quarters as capital expense needs decrease.
Frontier's dividends are more generous than those of fellow telecoms France Telecom
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Fool contributor Anders Bylund owns shares of France Telecom but holds no other position in any of the companies discussed here. Motley Fool newsletter services have recommended buying shares of France Telecom and AT&T.
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