RadioShack (RSH) Cuts Dividend, What High-Yield Dividend Companies Might Be Next? (NOK) (TNK) (FTR)


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July 25, 2012 11:02 AM EDT Send to a Friend
RadioShack (NYSE: RSH) announced today it was suspending its dividend, amid dismal second-quarter results showing a net loss on tighter margins at the electronics device and accessory retailer. RadioShack said it was shifting its capital structure amid upcoming debt maturity of $375 million in August 2013, to lower its debt-to-equity (D/E) ratio. Of note, its D/E was 0.91 at the last quarter (or 0.99 from today's release, adding long-term debt to the upcoming maturities).

With RadioShack's dividend yielding an astonishing 13.5 percent (paying 50 cents per year) following a 69 percent drop in the stock price (as of Tuesday's close), what other "high dividend yield" stocks might be in the same boat? Here's a brief list:
  • Nokia Corp. (NYSE: NOK) - no surprise here. Nokia's dividend yield is a 10.3 percent with D/E of 0.58. Shares are down 66.8 percent over the last year;

  • YPF S.A. (NYSE: YPF) - dividend yield at 26.9 percent, while D/E is at 0.68;

  • Cellcom Israel Ltd. (NYSE: CEL) - dividend is currently at a 19.1 percent yield with D/E of 23.9...a little high (though high debt doesn't mean it isn't being managed well). The stock is down 78.2 percent at Tuesday's close;

  • Teekay Tankers Ltd. (NYSE: TNK) - dividend yield at 15.5 percent with D/E of 0.53. Shares are down 47 percent from last year;

  • Telefonica (NYSE: TEF) - dividend currently yields 11.9 percent with D/E at 3.06. Shares are off 47.7 percent as Spain continues to be shaky;

  • Frontier Communications Corp. (Nasdaq: FTR) - shares are down 47.3 percent from last year, with a dividend yield of 10.7 percent and D/E at 1.89. The company cut its dividend in February, but could cut it again. (You knew Frontier was going to make the list.)
Again, this is a brief list which doesn't take into account things like cash flow, what cost of capital is, any return on debt or equity, and the like.

Although the industries are diverse, dividend investors should keep these names on their radar moving forward in anticipation of potential cuts.

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