Windstream (WIN) - Blowing Healthy Dividends

Few investors would turn up their noses at a dividend yield of around 9% on any stock. That’s precisely what you would be getting with an investment in telecommunications firm Windstream Corporation (WIN), which is listed on the S&P 500.

Established in July 2006 as a result of a spinoff from Alltel and a resultant merger with Valor Communications Group, Windstream Corporation (WIN) offers telecommunications services to residential and business customers in rural communities in the United States. The company has more than 3.4 million access lines in 23 states and around 1.3 million high-speed Internet customers generating more than $4bn in annual revenue.

Windstream (WIN) sits on a forward price to earnings (PE) multiple of around 13.6 times earnings and has declared a quarterly dividend, every quarter since being spun-off from Alltel.

Reporting first quarter earnings in May 2005, the company delivered a solid set of results adding another 36,000 new high-speed internet customers and 12,000 new digital TV customers during the quarter. Revenue was slightly lower than the same quarter in the previous year delivering $905 million.

Windstream (WIN) is also not sitting back on its laurels and is looking to grow its revenue base. It has recently announced the acquisition of Iowa Telecom (IWA) by the end of the second quarter which is awaiting second quarter approval.

A word of caution: telecommunications firms face very strong competition from mobile operators and intense price competition in the industry. As such dividends may not be sustainable in the future, and investors need to do their homework thoroughly to decide which telecoms firms they feel can sustain their payouts and maintain earnings and revenues over the longer-term.

With high-speed internet access and telecommunications now becoming essential services for businesses and the demand for digital TV rising across the globe, Windstream (WIN) with its high dividend yield and growth potential could look attractive.