CenturyLink Offers Shareholders 9% Dividend Yield (CTL)
By: Ned Piplovic,
Zooming out to a broader time horizon, except for one annual dividend cut in 1998, CenturyLink has increased its annual dividend payout consistently between 1990 – when the company started paying dividends – and 2013. However, the company implemented its second dividend cut when it reduced its quarterly payout more than 25% from $0.725 to $ 0.54 for the first quarter of 2013. Since that cut, the company has continued paying the same $0.54 quarterly amount for the past six years.
In addition to the stable annual dividend payouts, the company’s share price has been on a steady uptrend since late November 2017 and has provided asset appreciation in excess of 20%, for a combined total return of more than 35% over the past 12 months. The share price’s 50-day moving average (MA) has crossed above the 200-day MA in a bullish manner on May 25, 2018 and the share price itself has stabilized well above both moving averages over the past two weeks. These technical indicators signal that the share price could have additional room on the upside, as least over the next few sessions.
Interested investors should conduct their own research to confirm the compatibility of this equity with their own investment portfolio strategy before moving forward. However, investors convinced that the share price might continue its uptrend and that the company will be able to at least maintain its current dividend payout level should consider taking a position prior to the upcoming August 31, 2018 ex-dividend date. The company will distribute its next round of dividend payouts on the September 14, 2018 pay date to all eligible shareholders before the ex-dividend date.
CenturyLink, Inc. (NYSE:CTL)
Based in Monroe, Louisiana and incorporated in 1968 as Central Telephone and Electronics, CenturyLink, Inc. is the second-largest U.S. communications provider to global enterprise customers in more than 60 countries. Through its Business and Consumer segments, the company offers virtual private network (VPN) data services, as well as protocol and Ethernet services. The company’s Prism TV allows customers to watch television or cable channels and record up to four shows on one home digital video recorder. Additionally, CenturyLink’s Vyvx service offers audio and video feeds over fiber or satellite. The company also provides broadband services, private line solution for transmission of data between sites, data center colocation services and network security solutions, as well as network management, installation and maintenance of data equipment, as well as building of fiber-optic broadband networks. Additionally, the company offers local calling services, long-distance and toll-free services and managed services consisting of network, hosting, cloud and IT services. As of December 31, 2017, the company operated more than 10 million total access lines and served approximately 5.7 million broadband subscribers.
The company’s current $0.54 quarterly dividend corresponds to a $2.16 annualized dividend amount and a 9% forward dividend yield. This current yield is almost 10% higher than the company’s 8.2% average yield over the past five years. While only slightly above the company’s own five-year average, the 9% dividend yield is more than eightfold above the 1.11% average yield of the overall Technology sector and more than 270% above the 2.42% average dividend yield of all the companies in the Telecommunications Services industry segment. Furthermore, CenturyLink’s current dividend yield is also 45% higher than the 6.2% average yield of just the dividend-paying companies in the segment.
Even with a 25% dividend cut in 2013 and six years of flat dividend payouts, CenturyLink managed to advance its total annual dividend payout nearly 17-fold over the past two decades. That level of growth converts to an average growth rate of more than 15% per year since 1998.
The share price declined more than 30% at the onset of the trailing 12 months and reached its 52-week low of $13.62 by November 27, 2017. However, after bottoming out in late November 2017, the share price ascended 76% and closed at its 52-week high of $23.98 on August 2, 2018. This closing price was also 20.5% higher than it was one year earlier.
The company’s total returns over the past three and five years were limited to single-digit percentages – 9.5% and 6.4%, respectively. However, the share price’s rebound of more than 20%, combined with the benefits of the high dividend yield, rewards CenturyLink’s shareholders with a total return of nearly 36% over the past 12 months.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.