Dallas, Texas 10/10/2013 (Financialstrend) – Windstream Holdings, INC. (NASDAQ:WIN) is a telecom services and infrastructure provider. On August 12, the company had announced the launch of $500 million senior notes offer which would attract interest of 7.75% and become due in 2012. This was to repay $500 million senior notes which were to be due in 2019. These notes attracted an interest of 7% only. Investors would be hard pressed to understand why the company chose to take on loan at costlier interest for getting a extension of 2 years to payback the senior notes.
This seems to be extension of the company policy of parking its debt in long term instruments. As of June 30, the $4.83 billion market Cap Company had close to $8.9 billion in accumulated debt. It is in light of these numbers that few analysts have started to question the firm’s rationale of paying out high dividends yields to its share holders.
In August, Windstream Corporation had announced $0.25 dividend per share of its common stock. The stock went ex dividend on September 26 and was payable to all share holders on record as of September 30. The dividends are to be paid out on October 15. Including the October 15 payout the company would have paid out $1 dividend over the past 12 months to its share holders of common stock. It has total outstanding shares of 588.6 million. These payouts translate to an impressive 12.1% dividend yield for this S&P 500 tracked REIT Company. Long term investors and trade gurus have started to question the logic behind paying out unsustainable dividends while the firm continues to add on to its long term debt.
As of close of business on October 8, the shares of Windstream were up 1.23% from its previous day close. It is trading at $8.21 per share.