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Frontier Communications Corporation Message Board

  • socdad44 socdad44 Jul 13, 2011 12:02 PM Flag

    I will probably regret this but...

    I am looking for a place to put some dry powder. Was thinking about 50,000. I have looked at FTR among others. Very nice dividend. Why so high? Obviously there is a catch for a 9% divi. I see very little growth which is to be expected.I also realize FTR deals with old technology. Is FTR paying 9% for working capital? I know I am inviting the clowns by posting this. If I can get one good response I will be happy. This is a real post ,no b.s. Thank you to all who respond intelligently.

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    • Try a Google Docs spreadsheet, you can make your own system:

      put FTR in cell A1
      put =GoogleFinance(+A1) in cell B1
      put =GoogleFinance(+A1;"change") in cell C1
      put +8.50 in D1
      put (D1-B1)/B1 in cell E1 (format as %)
      put +J1/B1 in cell F1 (format as %)
      put E1+F1 in cell G1 (format as %) Expected 1-yr return
      put +0.1875 in cell H1
      put +4 in cell I1
      put +H1*I1 in J1

    • Sounds like you have a good system in place.

      Different strokes for different folks.

      Good Luck.

    • "A year ago FTR was $7/share, now it is $8/share....or a 12% increase."

      But a year ago FTR was $7.19 a share and traded up to $9.77 for a 35% return. The Goldman target at the time was $9. I sold at $9.51 after the high as FTR started going down. Long term investors need to be aware that they let a 35% return investment get back down to 12%. At the time I recall price targets from posters being tossed out for $12, $13 and even $15. A trailing stop is useful to lock in gains, but I use price alerts and put the orders in myself.

      I dutifully put in price alerts at a major brokerage firm for prices around $8 and got back in. My bad that I did not get out at $8.8x high in May, but I think Goldman and others will raise their target prices if earnings are good this quarter. I'm a little bit more likely to get out at $8.50 since I see better returns elsewhere.

      Again, I find price targets helpful. They are not perfect but I find them helpful.

    • I use the standard time frames on Google Finance and I think they are useful time frames. YTD and shorter time frames all show the same pattern. Cycle through 1-yr and FTR is up, but then click 5-yr and things are pretty grim. So, to be specific I let Google Finance arbitrarily chose my time frames. I just got some software to allow me to pick my own time frames and allegedly include dividends in the analysis.

      My points are be careful what price you pay for FTR (or any stock) and I think $8-ish is reasonable for FTR. But do look to sell and do think about selling a stock before hand. If I can make a $0.19 dividend and $0.50 price appreciation on FTR in a couple of months, I'll bank it.

      We've had two 50% down stock markets in 11 years and I'd say we will have two more 50% down markets in the next 11 years. If you get out at good prices and things start looking bad for stocks, employment, housing, automobiles, stay out.

    • I suppose, but why do you insist on using an arbitrary date?

      A year ago FTR was $7/share, now it is $8/share....or a 12% increase.

      FTR mainly appeals to income investors. The shares trade in a fairly narrow range, and they throw off a ton of cash.

    • I like your thinking. I subscribe to CIF myself. (Cash in Fist)
      Are you going to pulling money off the table while this federal budget gets sorted out?

    • My3Cents:
      I own 60,ooo shares of FTR that I bought at $8.60. I have a 130K short term capital gain this year from other trades that I intend to wipe out the Fed & State tax liability of 28K & sell this after earnings are reported on 8/3 for $7.60. I will move on to something else. Way too much risk here in my opinion & if they decide to lower dividend the stock will die, or if they miss earnings again.

      • 1 Reply to tyringtoplan
      • I watch a lot of major takeovers and acquisitions. There is close to a 100% probability that something bad happens after the takeover/acquisition and about a 50% probability that there will be a second bad event. FTR has already had their first bad hit. I don't think they will have a second bad hit when earnings come out for this quarter.

        But, yeah, FTR is down $1.83 this year so far. Hard to hold for almost 10 quarters to make that back up $0.19 a quarter. I'm looking to sell around $8.50 and I think FTR gets there before earnings.

    • i'll add 2 cents

      yes .. FTR very good place to park some long term money ..
      let the div work for you ...

      50000 seems like a lot , you haven't indicated what else
      you own , or what kind of investments you have .... or what
      sectors you are in

      FTR has had an outsized div for some time , was a buck before
      the reverse merger with VZ ,, at that time it was taken
      down to 75 cents ...

      risk has to be considered rather high but does seem
      safe ,, accounting practices have pretty much guaranteed
      it for another year , by then the VZ biz should be fully
      acretive and throwing off cash ...

      personally i would plan to buy 10-15k shares not all at
      once try to get some bargains and spread the rest to
      other good div companies ...

      FTR price will probably stay under 9 for another year ..
      don't look for a lot of price appreciation for some time ..

      • 1 Reply to garceman1
      • great post, thank you. Well this is me 4,000 shares csco, on the cheap I hope. GNMA {yup said GNMA 6,000 shares + or -} PTRAX @ 4,000. My new FTR pickup and 58000 left for dry powder. conservative with growth opportunities in my opinion. I think FRT is pretty safe now till maybe 18 months / 2 years depending on many factors of course. Thank you again for the opinion.

    • 1) The 6-month low for FTR is less than 20 cents lower than here, so this is a good price, IMO, to buy FTR.

      2) Upside price target at Goldman Sachs is $8.50 (higher at other firms) for a nice 6.25% price appreciation plus 9.5% dividend or 16% total expected 1-yr return.

      3) The majority of the FTR dividend is return of capital (from depreciation and amortization), so much of the return will be deducted from your cost basis and taxed when sold.

      4) VZ and CTL offer better total returns: VZ 5.25% dividend all of which is qualified, 13% price appreciation for an 18.25% total upside (my buy price range is under $36 for VZ); CTL 7.51% dividend yield, 21% upside to its $47 upside target price for a total return of 28.49%. Haven't checked CTL website to see how much of their dividend is qualified and how much is return of capital. CTL is well within my buy price range.

      I've done some preliminary work on FTR's performance versus CTL, WIN, VZ and FTR comes up short. I'm looking to sell my FTR at the Goldman target price -- but if I do I will be more than happy to buy it back if "The Price is Right."

      • 2 Replies to lincolnparker60614
      • It is a stretch to say that a company that pays a 5.25% dividend or 7.51% dividend is superior to a 9.1%.

        FTR's dividend is billed as a return of capital only because sum of the years digits are used to amortize $2.5 billion of intangible assets over 9 years and 12 years for residential and commercial customer lists.

        A customer list is an asset that under normal conditions, grows and doesn't necessarily depreciate.

        Saying that a company that pays 5% is superior to one that pays 9% because it has more "upside" is somewhat fascinating. VZ's share price has declined steadily over the last 10 years. CTL's share price has fluctuated wildly, but if one were to use the year 1999-2000, it is down about 10%.

        "preliminary work" showing FTR's performance vs CTL WIN VZ comes up short is not exactly award winning analysis. FTR's management has stated that the dividend is safe and they intend to maintain it. The latest quarterly filing and latest annual report confirm the statement. If you like a 9.1% yield, and you like a balance sheet that indicates that that yield is sustainable, then FTR is a good place to park some cash. Citing anonymous analysts who don't give financial figures that support spurious price predictions is is ludicrous.

      • thank you both for your input. Looked at the price and bought 6500 shares. I have watched FTR for about 4 months and like the risk/reward chances.

    • I consider FTR a good place to park your dry powder. The market is consolidating and they are positioned well.

      I began my relatuionship with FTR in 1965 and it has not only protected the principal, but yielded nicely for almost five decades.

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