How Safe Is Lumen Technologies' Massive 10% Dividend Yield?

The last 10 years have been tough for income investors. The decade was bookended by major crises -- the Great Recession and the coronavirus pandemic -- that compelled the Federal Reserve to cut the Fed funds rate to near zero. Other interest rates across the board followed that benchmark downward, which left income investors little choice but to shift toward somewhat riskier investment vehicles like dividend-paying stocks.

Initially lured by the fact that tax rates on qualified dividend income are lower than the rates for interest from corporate bonds, many income investors have found there are quite a few stocks with massive dividend yields at their current share prices. However, companies can cut those payouts with no warning, and when share price moves push yields up toward the double-digit percentage range, that's often a sign the market thinks the payout is at risk.

Investors, then, need to be on the lookout for those diamonds in the rough -- companies with hefty dividend yields that the market fundamentally misunderstands. In my view, Lumen Technologies (NYSE: LUMN) is one of them.

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Source Fool.com