Cash may be hard
to come by for nearly everyone these days, but there are still
companies producing loads of cash -- and giving it to shareholders.
Which of these companies recently announced a nearly +1,000% dividend
increase even as the economy is slowing?
A.) AK Steel (AKS)
B.) Bank of America (BAC)
C.) CenturyTel (CTL)
D.) Caraustar Industries (CSAR)
E.) Norfolk Southern (NSC)
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Published:
November 3, 2008
The
correct answer is 
(C.) CenturyTel (CTL)
Formed in 1968, CTL is the
country's seventh-largest local
phone company. It provides
fixed-line phone services and
high-speed Internet to rural areas
in 25 states. The company is the dominant
telecom carrier in its markets,
servicing 85% of the households in
its areas with local fixed-line
phone service, 60% with
long-distance services, and 29% with
high-speed DSL Internet access.
In June 2008, management revised the
company's dividend policy. It now
intends to return virtually all free
cash flow to shareholders via
dividend payouts and share buybacks.
In line with this policy, and after
paying out $0.068 per share in the
first two quarters of this year, management said it
will pay a robust $2.80 per share
over the coming four quarters. That
represents an astounding +937% leap
from a formerly projected $0.27 a
share. But even with the
increase, the new dividend rate
represents just 52% of estimated
free cash flow in 2008.
How can this S&P 500 member company
afford to raise its dividend by such
a huge amount when other companies
are slashing theirs? Its strong
operating performance tells us the
answer. The company has grown
per-share earnings an average of
+15.6% a year for the past three
years through 2007, and per-share
cash flow by an average of +12.7% a
year over the same stretch. It has
achieved much of this growth by
acquisitions, and offsetting the
losses in the fixed-line phone
business, the company increased
revenue via double-digit gains in
high-speed Internet and
broadband TV customers.
CTL may look like one in a million,
but you can find more companies
like CenturyTel. StreetAuthority
editor Carla Pasternak has searched
high and low and found strong,
high-yielding securities that have
the potential to raise their
dividends, even in these challenging
times. Her latest issue of
High-Yield Investing
highlights CTL and a handful of
other stocks that are rich in
fundamentals -- and cash flow. To
learn the names of these stocks, and
to learn more about High-Yield
Investing,
please visit this link.
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