Otelco Beats the Market – With 9% Yield to Boot
March 21, 2011 – by Richard Band
When I made my pick for the best stock for 2011, namely telecom Otelco (NYSE: OTT), the world was a much calmer place. But Otelco is standing strong even now — since riots, revolutions, credit calamities, earthquakes and even nuclear-tinged explosions can’t stop this investor-focused U.S. utility from continuing to deliver gains and high dividends for investors.
With yet another regular steady dividend that hasn’t been threatened since it came to the public market years ago – the Oneonta, Alabama, based Otelco is paying another 42 cents a share to its valued shareholders.
This equates to a dividend yield currently around 9%, give or take, on top of its gains so far for this year of over 3%. If you add the dividend payment on top of OTT stock returns, you’re looking at a 5.5% return on your investment year-to-date.
The company’s performance compares quite well against the S&P 500 with its less enthused recovery of about 2% and its anemic average dividend yield of only 2%. And this is no anomaly has it continues the trend in which since coming to the market in the fourth quarter of 2004 – Otelco has outgunned and out paid the general market by nearly 6 times.
In the last quarterly report and discussing the company’s past and pending future – management outlined the operating income gains of over 22% over the respective quarter the prior year. And it continues to plow ahead at increasing existing customer base revenues and services rather than just doing acquisitions like its lesser and now bankrupt peers in rural communications.
The stock did its often seen gyrations around the dividend ex-date as some trader wannabes keep trying out-smart the market by trying to grab a quick buck in so-called dividend capture strategies.
But as before – such moves don’t work for the traders – but do help those seeking to buy into the stock as well as adding to existing holdings.
Despite unrest and market uncertainty, I advise all investors to continue to buy and own this ample dividend payer Otelco.
Check out the other FREE stock picks that make up InvestorPlace.com’s Top 10 Stocks for 2011.
Neil George is editor of The Pay Me Strategy (www.paymestrategy.com).