Telecom & Wireless
Merrill Lynch Sees Verizon Deal Making the Huge Frontier Dividend Safer
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Frontier Communications Corp. (NASDAQ: FTR) has the highest dividend yield in the S&P 500 Index, outside of the energy sector. This is one of those dividends that has been very difficult for many traditional analysts and investors alike to evaluate. That is why the opinions are so varied.
According to Merrill Lynch, this dividend is becoming less risky. The firm hosted Frontier’s CEO Dan McCarthy and CFO John Jureller for investor meetings in Boston, with the company preparing for the closure of the Verizon Communications Inc. (NYSE: VZ) asset purchase and trends in the core business.
What matters here is not just that Merrill Lynch reiterated its Buy rating. It has a $9.00 price target, some 72% higher than the prior $5.21 close. Then there is the 8% dividend yield to consider.
The transaction with Verizon is for $10.5 billion in an asset purchase expected to close on or about March 31. Frontier highlighted synergy expectations, operational and competitive trends in the core business and an expected smooth transition of the deal execution.
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