3. Lumen Technologies, Inc. (NYSE:LUMN)
Dividend Yield as of February 11: 9.91%
Number of Hedge Fund Holders: 25
Lumen Technologies, Inc. (NYSE:LUMN) is an American telecommunications company, headquartered in Louisiana, specializing in network services, cloud security, managed services, big data as a service, multi-cloud management, SaaS apps, cloud connect, internet, phone, and television. Offering a yield of 9.91%, Lumen Technologies, Inc. (NYSE:LUMN) is one of the top technology dividend stocks to invest in.
In the third quarter earnings report, published on November 3, Lumen Technologies, Inc. (NYSE:LUMN) announced earnings per share of $0.49, beating estimates by $0.12. The $4.89 billion revenue was down 5.42% on a year-over-year basis, missing estimates by $16.29 million.
According to a report on December 9, The U.S. Army Reserve Command recently selected Lumen Technologies, Inc. (NYSE:LUMN) to provide VPN services, including remote access solutions, to more than 650 army reserve locations across the country. The 11-year task order is worth $23 million and was awarded under the General Services Administration’s 15-year, $50 billion Enterprise Infrastructure Solutions program.
On November 4, Citi analyst Michael Rollins upgraded Lumen Technologies, Inc. (NYSE:LUMN) to Neutral from Sell with a $13 price target following the Q3 results. Lumen Technologies, Inc. (NYSE:LUMN) surprised with its revised capital allocation plan, and the analyst believes that maintaining the dividend combined with the accelerated repurchase of 7.5% of the outstanding-shares “are likely to support the stock.”
As of Q3 2021, 25 hedge funds in the third quarter database of Insider Monkey were bullish on Lumen Technologies, Inc. (NYSE:LUMN), down from 33 funds in the preceding quarter. Knoll Capital Management holds a $1.2 million stake in the company as of September.
Here is what Longleaf Partners Fund has to say about Lumen Technologies, Inc. (NYSE:LUMN) in its Q3 2021 investor letter:
“The best news and the biggest market reaction surprise in the quarter was at our largest holding Lumen. After much engagement with Southeastern following our amended 13D filed last December, the company announced that it was selling two assets – the slowest growth part of its legacy copper landline business in 21 states in the US and the Latin American (therefore highest discount rate / lowest multiple) part of its enterprise fiber business. At a time when the company was trading at 5.5x EBITDA (earnings before interest, taxes, depreciation and amortization) for all its assets, it sold the legacy landline assets (i.e., the lowest multiple part of its lowest multiple business) for that same 5.5x and the Latin American assets (i.e., the lowest multiple part of its higher multiple business) for 9x. The absolute amount of gross proceeds was almost equal to the company’s market cap. We believe the remaining legacy assets are worth greater than 5.5x and the remaining fiber/enterprise assets are worth greater than 9x, especially because infrastructure funds have recently paid mid teens multiples for similar fiber assets. Thus, we now have a higher quality, higher growth, lower leverage mix of assets at Lumen. But when this news was announced, Lumen’s stock price initially went down, due to weak communications around future growth and capital allocation on the conference call. This communication failure can be fixed much more easily than a business failure, and we were encouraged that the company authorized a share repurchase to take advantage of the market’s short-term misunderstanding. The stock price stabilized and increased as the quarter went on (although two annoyingly-timed, negative sell side reports hit the stock on September 30), but there is still an enormous gap between price and (growing) value.”
