Last week Frontier Communications, one of the 20 largest employers in the Rochester area, announced a 5% increase to the annual cash dividend. The dividend increase signals changing times after the company has seen stagnant and even declining dividend payments since 2009.
After watching customers leave for more convenient alternatives, the company decided on a turnaround strategy to rescue revenues, increase cash flows, and improve customer retention. Management has been making a push into the high-growth area of broadband services and investors have rewarded shareholders as the company has modestly stabilized revenues. At the close of business on Friday, shares are up over 34% year to date.
Landlines are no longer the wave of the future or essential to everyday life. If this company wishes to remain solvent, it is vital that it moves into other high-growth areas. This dividend boost doesn't mean the company is out of the woods but it is a step in the right direction.
Ethan Wade, Financial Advisor
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).