Fructivore Investments

I have often found compelling values in rural telephone companies, such as Windstream and Qwest (now acquired by CenturyLink, as they throw off large amounts of free cash flows and are kind enough to produce dividends. My latest discovery in this area is Consolidated Communications (CNSL), which pays 8.4% and which has a free cash flow yield of 11.4% after excess cash is taken into account, based on last year’s results. Unlike Windstream and Qwest, Consolidated uses wireless partnerships to offset loss of traditional customers, as well as high speed Internet, which adds a further level of stability.

I have also reexamined my views of excess depreciation and amortization: Although it is wise to run the calculations first treating the excess depreciation as taxable, and to place significant weight on that calculation, it may be helpful as well to make a reasonable, conservative projection of the actual present value of the tax benefits associated with excess depreciation. Of course, as with all projections, this one is unlikely to be ultimately accurate and one should avoid using only this measure to justify an investment, but the projection must still be of interest to investors.

For my full views on Consolidated Communications, please visit http://seekingalpha.com/article/264006-consolidated-communications-a-strong-candidate-for-dividend-investors

Filed under:
Investing by grocca