Forget Frontier Communications Corporation: These 2 High-Yield Partnerships are Better Buys
Wireline telecom Frontier Communications Corporation (NASDAQ: FTR) is struggling as customers continue to switch to alternative communication options like cellphones. That's already led to a dividend cut this year -- so if you're looking at the company's huge yield, stop. Instead, consider the impressive yields offered by limited partnerships Alliance Resource Partners, L.P. (NASDAQ: ARLP) and Buckeye Partners, L.P. (NYSE: BPL), both of which just raised their distributions.
Frontier's yield was recently hovering around 18%. That's a huge yield, but it comes with equally large risks. For starters, the company has already cut its dividend this year. Then there's the not-so-minor issue of a weak balance sheet. Long-term debt stands at 83% of the capital structure; Frontier loaded up on debt to buy more of the wireline assets that underpin its struggling business. Its current ratio, meanwhile, is a relatively weak 0.7. And in the second quarter it announced a write-off that pushed earnings deep into the red. It's been bleeding red ink for two years, with 2017 likely to bring that number to three.
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Source: Fool.com
