12% DIVIDEND YIELD 💸 Is This Stock A Buy? #Best Education Page #Online Earning

how's it going today guys I hope you're

having a fantastic day I do have a

couple of quick updates for you guys but

if you want to just skip right ahead to

the video I'm going to include a

timestamp down in the comment section

below so you can go ahead and just click

on that and skip ahead if you're just

wanting to get read ahead to the video

but a couple of updates for you guys

first of all as I'm sure you guys

noticed I took a quick break from

uploading on YouTube I took a trip to

Washington DC first of all and while I

was away I was kind of thinking about

what I wanted to do with the channel and

the one thing I've really stressed above

all was that I wanted to be more

organized and maybe structured with the

content I'm putting out there and so I

actually put a vote out there to my

community there on that video and that

the vote was only up for about 24 hours

but basically I asked people what they

were looking to see from my channel in

the top three things were number one was

passive income most people want passive

income related videos number two was

stock market analysis analysis of

individual stocks and number three was

stock market strategy so that's exactly

what you're going to be getting from

this channel now earlier on in the week

I'm going to be doing a video that's

either on analysis of a particular stock

or it's going to be a stock market

strategy type video and then later on in

the week it's going to be a passive

income style video and then anything

else that I want to do that might not

fit that I'll end up uploading on the

weekends so going forwar
d now expect to

about two to three videos a week from my

channel earlier in the week being the

stock market stuff later on in the week

being the passive income related videos

now that being said I'm also going to

continue my giveaway of my stock radar

membership every single week that's my

weekly stock analysis membership site

and it is closed up until August 1st or

a little bit thereafter I'm not sure

what day I'm going to open it so the

only way you can get in right now is by

entering that giveaway and so I'm gonna

do the giveaway next week to start that

up again and then every single week I'm

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and all those details for how to enter

are down in the description below but

anyways let's go ahead and get into the

video here and talk about a stock that a

lot of people have been messaging me

about I've been seeing it mentioned in

the comments of different videos and

that is a stock called CenturyLink

it's a company that I honestly had not

heard of before until I had so many

people contacting me about it I said

alright I better look into it so

CenturyLink trades on the New York Stock

Exchange under the symbol CTL and take a

wild guess why people are interested in

this stock it's because of the fact that

they have an 11.5 percent dividend yield

this stock is currently paying out a

massive dividend it is one of the

highest yielding dividend stocks out

there right now and so a lot of people

are looking at that and saying boy would

I love to have a 12% dividend but in

this video what I plan to do is talk

about whether or not this is a dividend

you can rely on and whether or not you

should be buying CenturyLink stock for

that 12 percent dividend now a little

bit more on this stock here they have a

price to earnings ratio of 10.5

according to Yahoo Finance and a forward

p/e of seventeen point eight and so that

alone indicates to me that earnings are

expected to decline in the future when

you're seeing a forward p/e ratio higher

than the current price to earnings ratio

so earnings are expected to decline for

this company based on future estimates a

little more background on this company

this is the third largest United States

telecom company they offer communication

services to residential business and

government customers and 75% of their

revenue comes from business customers so

most of the customers they are serving

our business-related customers so first

of all I want to talk about the

telecommunications services sector as a

whole because it's been doing terrible

over the last year here so on the bottom

right there this is from the fidelity

sectors and industries tool it's a tool

that I like to use when I'm looking at

the different sectors and industries and

comparing them to the overall market and

as we can see here over the last year

the S&P 500 has returned about 13 point

oh four percent and the diversified

telecommunications services sector has

returned a negative seven point four

percent so it has underperformed the

market and it has declined in the last

year so let's go ahead and look on the

left there those are some of the

competitors of CenturyLink now like we

said CenturyLink mostly works with

business customers so these aren't going

to be direct competitors but all these

come

are in that diversified

telecommunications services sector and I

just kind of ranked them from the top to

bottom as far as where they're falling

just to give you an idea of what these

stocks are doing and how they're

performing so Verizon despite the fact

that the sector is down as a whole

they're actually up 7.8 percent over the

last year t-mobile is down 4.5% Comcast

down 14.8% AT&T the behemoth down 17%

and they actually felt quite a bit after

it was announced that the deal with Time

Warner went through largely because I

think shareholders of AT&T are concerned

about the debt that AT&T is taking on

CenturyLink down 24.2% over the last

year and then Sprint is down thirty two

point three percent Sprint is a little

bit over $5 of share now so they're

almost considered a penny stock at this

point in time trading at a share price

of under $5 a share which is

unbelievable but that's what's going on

within diversified telecommunication

services and that gives you an idea of

where CenturyLink is falling they are

one of the worst performers here of

these large telecom companies and again

the reason why people are interested in

this stock is because the average

dividend of a stock on the S&P 500 is

around two percent the average dividend

in the telecommunication services is

five point seven percent and this

dividend is almost a little bit more

than double the average dividend in

telecom services so that right there is

why people are interested in this stock

but one of the things I always stress on

this channel is that you should not

solely invest in the stock because of

the dividend in fact the dividend should

kind of be the afterthought the number

one thing you want to be looking for is

asset appreciation to make sure the

actual share price is going to

appreciate and then if you get a

dividend as well that's kind of the

gravy but a lot of people solely look

for high dividends and this might be a

trap here so let's go ahead and talk

about why this dividend might be cut in

the future so first of all let's go

ahead and determine whether or not

CenturyLink can even afford to pay this

dividend now there's a couple of

different ways you can do this

I always rely on the dividend coverage

ratio and that you calculate by taking

the earnings per share and you can do

this quarterly or annually divided by

the

dividends per share and if that number

is below one that means that they are

paying more in dividends than they are

earning per share meaning they can't

afford that dividend so starting back

there let's look at 2014 they had

earnings per share of dollar 36 in a

dividend per share up to 16 given them a

coverage ratio of zero point six three

meaning they could not afford the

dividend in 2014 they couldn't afford it

in 2015 either they could not afford it

in 2016

however in 2017 they earn two dollars

and 21 cents per share and they paid two

dollars and sixteen cents in dividends

so they had a coverage ratio of one

point zero two meaning they barely could

afford that dividend when I'm investing

in a stock I want to see a coverage

ratio of above 1.5 that's usually a good

amount of wiggle room for the company to

be making a good profit themselves and

retaining earnings and also being

generous with the shareholders and so a

1.02 is not a dividend you can rely on

especially given the last three years

there of you know not being able to

afford that dividend and having to go

into debt paying out that dividend and

so that right there is an indicator that

this company cannot afford to continue

to pay this dividend based on where

their earnings are at now now if their

earnings improved down the road and

they're making more money then yes they

could be able to afford that dividend

but when you're looking at an industry

or sector that's suffering overall and

having a hard time growing that is when

you have the question of will this

company be able to you know improve

their earnings and make more money and

improve their earnings per share so one

of the things are going to hear a lot

about with CenturyLink is their

acquisition of level 3 communications

CenturyLink acquired level 3

communications in 2017 and this expanded

their FiOS network and high-speed data

for business customers which is a key

growth area for telecom right now and so

basically what is happening right now is

that old communication is dying

you know landline phones are dying

people are not you know having landline

phones I certainly don't have one and

pretty much everybody I know has cut the

cut the landline telephone service to

their home and so because that legacy

part of their business is declining

they're responding by buying new

communication assets and level 3

communications was a

a new communication asset company

primarily with this you know FiOS and

high-speed data for business so the

overall problem that CenturyLink is

having is indicated on the bottom left

there it's a problem of revenue

stability so there's a decline in the

revenue from the old communication

assets because people are cutting the

cord and getting rid of their landline

telephone services but the new

communication revenue is not increasing

fast enough to offset those losses and

so they haven't quite reached stability

where hopefully they would reach a point

where their new communication

investments would begin to grow revenue

and they would see revenue growth going

forward so they're still in stages of

seeing declining revenue due to the the

dying off of that legacy portion of

their business now the other problem we

have to talk about here is the fact that

the level 3 communications CEO is going

to take over as CEO of CenturyLink in

January of 2019 and oftentimes when you

see a new CEO taking control one of the

first things are going to do is cut that

dividend we saw that same thing take

place with General Electric when the new

CEO took over John Flannery one of the

first things he did was cut that

dividend because it didn't make

financial sense for that company to pay

one and so we could easily see this

happen with CenturyLink we're one of the

first orders of business here is to cut

that dividend because they can't afford

to pay it so that right there I think

it's one of the biggest threats to that

dividend is the fact that there's going

to be a new CEO taking over in January

of 2019 moving on we now look at one of

the other big problems for CenturyLink

and that is the fact that they are going

into a lot of debt so what they're doing

is they're acquiring these other newer

communication companies like level 3 but

as a result they are broadening

themselves with a lot of debt and this

is kind of what a lot of these telecom

companies that are doing

we're also saw this happening with AT&T

buying the Time Warner assets and trying

to diversify but in the process they are

building up their debt and taking on

massive amounts of debt so on the bottom

there we have the liabilities for

CenturyLink from 12 2014 to 2017 and as

you can see they really began to grow

from 2016 to 2017 that was when they

acquired level 3 communications and

there

long-term debt all more than doubled in

that period of time from 18 point 1

billion to thirty seven point two

billion and so total liabilities went

through the roof and as a result of

their increase in debt their credit

rating was downgraded to junk quality by

SP Standard & Poor's and I believe all

the major ratings agencies have them

read it as junk as far as their

borrowing goes and so these agencies

don't have strong confidence in Century

links ability to pay back that debt so

the overall problem was the cord cutting

trend happening and the decline of the

old communication assets and landline

communications so their solution was to

buy new communication assets that led to

another problem of being burdened with

debt and the debt load particularly the

long term debt ballooned out of control

and then the reading agencies downgraded

their debt to junk rating however the

one thing we do have to say here is that

the telecom sector is known for being a

cash flow machine because it is a

subscription type business where you

know exactly what you're going to be

paying for your landline telephone or

for your data or for your Wireless plan

every single month and because it's a

recurring revenue business they are a

cash flow machine so that does give them

a good ability to pay back that debt

because they have a good recurrent

revenue model but they still have a

sizeable debt load and you know the

major agencies that are not confident

about their ability to pay back that

debt so overall that is what is going on

with CenturyLink that is why we have

seen that stock fall about 25 percent in

the last year and you cannot count on

this dividend there's nothing saying

that this dividend is safe or that it's

not going to be cut now if it is cut

that one thing you have to remember is

that right now there's paying about a

double yield compared to what most of

these telecom companies are paying out

and even if it was cut 50 percent that

would still be a sizable dividend and it

might be an interesting investment but I

just don't really have confidence in the

telecom industry overall just for these

main reasons here first of all we know

old communication is in decline second

of all the value Wireless options are

improving and that's more towards you

know the industry overall so that was

one of the problems I have with AT&T is

that the value options like Straight

Talk are really improving their service

and reliability and more and more people

are moving away from these large

carriers and going for these value

options number three high speed data and

new communications is the growth

opportunity for these telecom companies

but number five is going to be the

counter to that because network upgrades

are very capital-intensive and that

again is just going to contribute to the

debt problem these companies have

they're either going to be laying out

massive amounts of cash to upgrade their

networks or they're gonna be acquiring

smaller companies and again taking on

more debt and overall the cord cutting

is on the rise and these are the major

threats to that industry so would I be

running out to buy CenturyLink stock I

would not I would at least wait until

the new CEO takes over and take a look

and see what his plans are but do keep

in mind that one of the first things

that usually happens when a new CEO

takes over is that they look at the

company and they say okay is this making

financial sense and if it isn't you know

they're not afraid to make some drastic

changes and so I do think that there is

a threat there with that dividend but

even if it is cut they might still pay a

sizable dividend compared to their peers

so if CenturyLink can achieve revenue

stability maybe they'll be able to keep

this dividend where it is I certainly

don't have much confidence in that

dividend but I just wanted to share my

thoughts with you guys on this stock but

anyways guys I hope you enjoyed this

video let me know what you think down in

the comment section below and if you

guys have any ideas as far as the videos

you'd like to see here or a stock to

analyze make sure you let me know down

below as well the giveaway for stock

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so make sure you guys enter that if

you're interested and I will see you in

the next video if you are interested in

learning more about investing in the

stock market I've created a free course

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description below here are a few other

videos you might enjoy as well

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