Frontier Communications: You're A Gambler

3/14/17

Frontier Communications Corporation (NASDAQ:FTR) has been a stock that I have been following for a while. Now, for a long time, I had worries over the company's dividend, and sure enough, it had been cut over time. Well, I am here to tell you that following the crash in shares as a result of the unsustainable loss of customers, it is my fear that earnings and cash flows will no longer be able to cover the hefty dividend. Given the massive sell-off in shares, the stock is yielding almost 16%. That is attractive to so many income investors who realize that in just a few years, their entire investment can be recouped via dividends. There is truth to this statement, but it relies on two things. First, a stable dividend, and second, still being in business.

Figure 1. One Year Price History of Frontier Communications Stock

Source: Google Finance

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