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Originally Posted by ESRwannabe
I'm thinking of buying a few shares next week. I'm just starting to research it. The current dividend yield is 12.62%. I have read arguments claiming the dividend is safe. I figure even it gets cut 50% it would be good enough.
I haven't looked into either CTL or level 3 in a while, but I did like level 3 in the past. If CTL can get rid of their copper and focus on fiber it will be a nice business.
Edit: I forgot to add that I have been looking into companies that will get a lot of benefit out of the tax changes. Telecom should be one of those.
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Long time LVLT holder here..now have more CTL than we'd care to have, but it does generate a $2.16/yr (.54/Qtr) divvy and it's now an important/key part of our income plan for RE and will fund a good chunk of our retirement expenses.
The thing we like about the combined company is that 75+% of their business will be to "enterprise" customers including large Fortune 500 companies and .gov agencies (see recent Commonwealth of PA win, for example). I know LVLT well (having also been a GLBC shareholder previously) and they have fiber assets virtually no-one else has - including oceanic cable that connects continents and similar. They basically have the largest fiber optic network on the planet. (LVLT's tag-line used to be "One Planet, One Network"). They're basically a huge part of the backbone of the internet.
The LVLT CEO (Jeff Storey) is going to be the new CEO starting in January of 2019, replacing Glenn Post (CTL CEO). Storey is also already COO and President of the new company which is goodness. How Post has kept his job with the stock performance these past years is a real head scratcher. If I were on the board, he would have been gone long ago. But most analysts and Wall Street types see having Storey (and his CFO Patel who played a big part in turning around LVLT) running the show as being a real game changer for the company.
Basically, the net is that this is NOT your father's CTL. It's a brand new company with the addition of LVLT. I still see articles (including one in Forbes just yesterday) with totally wrong info - eg: Forbes claimed they do not have enough FCF to continue to pay the divvy (they do, in spades), and that no insiders have bought in the last year (also totally wrong - virtually every key insider did huge purchases within the last month). Most analysts also are not counting LVLT income or other financials when reporting on the company. It's really amazing to see just how wrong everyone has been and it's really sloppy. Caused me to rethink my trust of so-called "analysts".
A bunch of analysts also continue (wrongly) to lump CTL in with FTR, Windstream and other "copper" rural telcos. This is NOT a rural telco. It's the third-largest fiber company in the world now. They just plain do not get it. I fault the company for not communicating as effectively as they should to the Street, but have confidence Storey will fix it.
Will they cut the divvy? Management has said (MULTIPLE times including on the last earnings call) that they are "committed to the dividend long-term and have more than adequate FCF to continue to pay it". If this were John Leger or some of the (IMHO) not so ethical GLBC execs, I may not believe it - but Storey is a very credible and trustworthy guy (based on my own observations) and if he says it, I believe it..
$2.12/share in income is very hard to pass up. I'm pretty shocked the stock is not flying off the shelves at a 12%+ yield but the continued WRONG analyst coverage is probably a big part of why.
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