That means you can't rely on its payout anymore than you can rely on Greek bonds.
This makes Telecom Corp. of New Zealand a "Hold" - at least until a needed pullback gives investors a chance to add more shares.
No doubt, uncertainty is the operative word in developed markets. The debt-ceiling debate in Washington came to an unsatisfactory conclusion that did little to alleviate the U.S. debt burden. Meanwhile, the bail out of the bail out of Greece has left Western investors with virtually no European alternatives for fixed-income investments.
That's why I've been looking around the world for higher-yielding, lower-risk investments. Truly, the yields on some stocks these days actually remind me of the old bond yields of yesteryear.
And at first glance New Zealand Telecom looks like it fits the bill. The stock has a forward annual dividend yield of 4.1%, and it's up 50% in the past year - compared to an 11% increase for the Standard & Poor's 500 Index.
But in this case, a closer look at the company reveals the following:
- New Zealand Telecom's earnings are on the decline.
- The stock's dividend was recently cut.
- And it has a negative payout ratio.