Time Warner Cable Offers Dividend, Growth Potential

By
A A A

IBD has long advised that investors focus on leading stocks in top industry groups.

Time Warner Cable ( TWC ) certainly matches this description. Its IBD industry group, Telecom Services-Cable/Satellite, ranked No. 17 out of 197 groups as of Monday's edition.

The cable giant is one of the best-rated stocks in the group, along withComcast ( CMCSA ).

Time Warner, which provides an annualized dividend yield of about 2.5%, has a trait that you especially want to see in income stocks: It sports a strong three-year EPS Stability Factor. Its factor is 4, near the best-possible grade of 0.

You prefer a strong grade in this area because it gives you some assurance that the company will keep earning a profit and keep paying its dividend quarter after quarter, year after year.

Another positive for Time Warner is several quarters of increasing ownership by U.S. mutual and hedge funds.

On the downside, Time Warner missed Wall Street's expectations with its third-quarter earnings, reported Nov. 5. But some analysts said they still like the stock.

Analysts at Credit Suisse said concerns over pension funding and voice costs were overdone.

In a recent note, they praised Time Warner's growth opportunity in broadband and commercials services, the margin expansion potential following the Insight acquisition, declining capital intensity and the company's "solid dividend and dividend growth profile."

In terms of chart action, Time Warner has been sketching a new base for about seven weeks. The pattern began when the stock sold off following its Q3 report.

The possible buy point is at 100.60, and there's resistance around the 100 level. So far, most of the base has taken shape below the 10-week moving average, which isn't constructive.

Don't confuse Time Warner Cable with the TV, film and publishing companyTime Warner ( TWX ). The two went their separate ways in 2009.

The quarterly dividend was raised from 40 cents to 48 cents a share about a year ago, then to 56 cents starting in March.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: CMCSA , TWC , TWX

Investor's Business Daily

Investor's Business Daily

More from Investor's Business Daily:

Related Videos

Stocks

Referenced

Most Active by Volume

84,725,997
  • $6.69 ▼ 5.11%
68,180,500
  • $3.38 ▼ 1.74%
52,748,572
  • $99.02 ▲ 1.38%
40,996,811
  • $74.92 ▼ 0.36%
37,831,986
  • $15.50 ▼ 0.58%
34,013,720
  • $31.98 ▼ 4.31%
32,417,159
  • $25.59 ▼ 0.78%
31,985,971
  • $54.87 ▲ 1.20%
As of 7/28/2014, 04:05 PM