12% DIVIDEND YIELD 💸 Is This Stock A Buy?

TL;DR

CenturyLink, a telecom company, offers an 11.5% dividend yield, making it attractive to investors. However, the company's financial stability, debt, and industry trends raise concerns about the sustainability of the dividend.

Transcript

how's it going today guys I hope you're having a fantastic day I do have a couple of quick updates for you guys but if you want to just skip right ahead to the video I'm going to include a timestamp down in the comment section below so you can go ahead and just click on that and skip ahead if you're just wanting to get read ahead to the video but a... Read More

Key Insights

• 🏃 CenturyLink's 11.5% dividend yield attracts investors, but caution should be exercised due to concerns about its financial stability.
• 📼 The decline in revenue from legacy communication assets and slow growth of new communication assets create challenges for CenturyLink's stability and growth.
• 🍉 Debt is a major issue for CenturyLink, with its long-term debt more than doubling after the acquisition of Level 3 Communications.
• 👶 The appointment of a new CEO in 2019 may result in a dividend cut as a measure to address the company's financial challenges.
• 😀 The telecom industry as a whole is facing challenges, including the cord-cutting trend and increased competition from value wireless options.
• 🚄 Network upgrades required for high-speed data and new communications are capital-intensive, further straining the financial position of telecom companies.
• ✋ Despite the potential risks, CenturyLink still offers a higher dividend compared to its peers in the telecom industry.

Questions & Answers

Q: Is CenturyLink's dividend reliable?

CenturyLink's dividend coverage ratio has been below 1 in previous years, indicating that the company couldn't afford the dividend. There are concerns that the dividend may be cut due to the company's financial struggles and changes in leadership.

Q: What is the key problem for CenturyLink?

CenturyLink is facing a decline in revenue from its legacy communication assets, such as landline phones, while the growth of newer communication assets hasn't been able to offset these losses. This lack of revenue stability poses a challenge for the company.

Q: How has CenturyLink's debt situation affected its financial standing?

The acquisition of Level 3 Communications in 2017 significantly increased CenturyLink's long-term debt. This debt load, along with the downgrade of its credit rating to junk status, creates uncertainty about the company's ability to manage its financial obligations.

Q: What is the potential impact of the telecom industry trends on CenturyLink?

The cord-cutting trend, declining legacy communication assets, and increasing competition from value wireless options pose significant threats to the telecom industry. Additionally, network upgrades required for high-speed data and new communications are expensive and can lead to further debt accumulation.

Summary & Key Takeaways

• CenturyLink, a telecom company, is gaining attention due to its high dividend yield of 11.5%.

• The company's financial health, including its coverage ratio and debt load, raises doubts about its ability to sustain the dividend.

• The declining revenue from legacy communication assets and the slow growth of newer communication assets further impact CenturyLink's stability.

• The appointment of a new CEO in January 2019 may lead to a dividend cut as the company tackles its financial challenges.