Updated 3/6/25
Cable One, Inc. (CABO) isn’t the biggest name in telecom, but it plays a key role in serving rural and smaller markets across the U.S. The company provides broadband, phone, and video services, though it has increasingly focused on high-speed internet as demand for traditional cable TV declines.
Lately, the stock has taken a serious hit, dropping nearly 44% over the past year. Investors are left wondering whether Cable One’s 4.29% dividend yield is a genuine opportunity or a warning sign of trouble ahead. With revenue declining, a heavy debt load, and questions surrounding dividend sustainability, it’s time to take a closer look at the numbers.
Key Dividend Metrics
📌 Dividend Yield: 4.29% (Forward) / 4.65% (Trailing)
📌 Annual Dividend Per Share: $11.80
📌 5-Year Average Dividend Yield: 1.49%
📌 Payout Ratio: 457.36% ⚠️
📌 Ex-Dividend Date: February 18, 2025
📌 Dividend Payment Date: March 7, 2025
Dividend Overview
At first glance, a 4.29% dividend yield sounds pretty attractive, especially compared to the company’s five-year average of 1.49%. But a closer look at the payout ratio of 457% raises red flags. When a company is paying out significantly more in dividends than it earns in net income, that’s a sign the dividend might not be sustainable long-term.
Cable One has a solid track record of paying dividends, but its current financial situation makes it clear that these payments are being propped up by debt or other means. That’s not a comfortable position for dividend-focused investors, especially in a rising interest rate environment.
Dividend Growth and Safety
Cable One has built a reputation for consistent dividend growth, but with earnings under pressure, that trend may not continue.
✔️ The company has steadily increased dividends over the years
❌ Earnings are struggling, with net income at just $14.48 million
❌ A sky-high payout ratio means there’s little flexibility to raise or even maintain the dividend
❌ The debt load is substantial, with a debt-to-equity ratio of 201%
Revenue is also shrinking, down 6% year-over-year. If that trend continues, Cable One will either need to cut expenses, raise prices, or make tough choices about its dividend.
Chart Analysis
Overall Trend
The chart for Cable One (CABO) shows a persistent downtrend over the past year. The stock price has consistently moved lower, struggling to sustain any prolonged rallies. The 50-day moving average (orange line) crossed below the 200-day moving average (blue line) months ago, reinforcing a bearish outlook. This type of crossover, commonly referred to as a death cross, often signals prolonged weakness in a stock’s price action.
Even during brief rebounds, the stock has been unable to break above these resistance levels, indicating that sellers remain in control. The 200-day moving average continues to slope downward, suggesting that longer-term investors remain skeptical of a reversal.
Recent Price Action
CABO recently bounced off its lows around $239 and closed at $274.77, showing some short-term buying interest. However, the recent rally still places the stock well below the 50-day moving average, which is also trending lower. This means that even if the stock gains some momentum, it faces multiple resistance levels ahead before any meaningful trend reversal can be considered.
The last few candlesticks show some volatility, with wide-ranging price action. The long wicks on some recent candles indicate that there is both buying and selling pressure, but sellers continue to cap gains.
Volume Analysis
Trading volume remains relatively steady, but there are some notable spikes. The highest volume days tend to occur during sharp price drops, which suggests that institutional selling is still present. A large green volume bar in July shows a temporary surge in buying, but that rally was short-lived as the stock quickly reversed downward.
More recently, volume has picked up slightly as the stock attempts to rebound. However, it’s not a convincing sign of strong buying conviction just yet. A true reversal would typically require above-average volume on up days, signaling that more buyers are stepping in.
Relative Strength Index (RSI)
The RSI indicator, which measures momentum, has been in oversold territory for a while. It briefly bounced near the 30 level, which is often considered a potential reversal point, but overall momentum remains weak. The RSI has started to turn up slightly, indicating that some buyers are stepping in, but it hasn’t yet broken into a strong bullish signal.
If the RSI moves above 50, it would suggest that bullish momentum is picking up. Until then, the stock remains in a fragile state where further downside is still possible.
Analyst Ratings
Cable One, Inc. (CABO) has recently experienced a mix of analyst opinions, reflecting both optimism and caution. The consensus 12-month price target stands at $457.20, indicating potential upside from current levels.
Recent Upgrades:
📈On March 5, 2024, MoffettNathanson upgraded CABO from ‘Neutral’ to ‘Buy’, adjusting the price target to $615. This upgrade was based on the firm’s assessment of Cable One’s strategic focus on broadband services and its potential to capture growth in underserved markets
Recent Downgrades:
Conversely, on February 21, 2023, Wells Fargo downgraded Cable One from ‘Equal Weight’ to ‘Underweight’, revising the price target to $68. The downgrade stemmed from concerns over rising operational costs and challenges in maintaining profit margins amidst a competitive landscape. These contrasting analyst perspectives highlight the complexities surrounding Cable One’s market position and future performance.
Earnings Report Summary
Cable One’s latest earnings report was a mixed bag, with some bright spots but also some clear challenges. The company wrapped up the fourth quarter and full year of 2024 with declining revenues and profitability struggles, though it did manage to maintain solid cash flow.
Fourth Quarter 2024 Highlights
Revenue for the quarter came in at $387.2 million, which was about 6% lower than last year. The decline was mainly due to weaker residential data and video revenues, a trend that has been affecting many broadband providers.
The biggest shock came in net income, or in this case, net loss. Cable One reported a $105.2 million loss, a dramatic swing from the $103.5 million profit it recorded in the same quarter last year. A large part of this was due to non-cash adjustments tied to its investment in Mega Broadband Investments Holdings LLC, rather than operational performance.
Adjusted EBITDA, a measure of profitability, landed at $211.0 million, down from $226.9 million in the prior year. That translated to a slight dip in margin to 54.5%, showing that while revenue was shrinking, the company was still keeping a solid percentage of its earnings intact.
One positive takeaway was cash flow. The company actually brought in more cash from operations, increasing to $167.6 million, compared to $151.7 million last year. At the same time, capital expenditures were cut back to $71.9 million, down from $115.6 million, which helped conserve cash.
Full Year 2024 Highlights
For the full year, revenue came in at $1.58 billion, marking a 5.9% decline from the previous year. This was mostly due to the same pressure on residential data and video services seen in the quarterly results.
Net income for the year was $14.5 million, a steep drop from $224.6 million in 2023. Again, much of this decline was related to accounting adjustments, but it still highlights a rough year financially.
Adjusted EBITDA for the year was $842.0 million, down from $916.9 million the year before. The EBITDA margin, however, held steady at 53.3%, which suggests the company is keeping its costs under control despite revenue challenges.
Cash flow was another area of concern, with operating cash flow dropping to $587.6 million, compared to $663.2 million the year before. However, the company did reduce its capital spending, which helped offset some of the cash burn.
Overall, Cable One is navigating a challenging environment, but it’s maintaining decent cash flow and adjusting its spending to manage the downturn. Investors will likely be watching to see if revenue stabilizes or if further cost-cutting is needed in the coming months.
Financial Health and Stability
Cable One’s balance sheet raises some concerns. The company holds $3.62 billion in total debt, while cash on hand sits at just $171 million. While the company does generate strong operating cash flow of $664 million, it still has a high level of debt to manage.
The profit margin is razor-thin at 0.92%, meaning that only a small portion of revenue translates into actual profit. However, the operating margin of 25.51% suggests that its core broadband business remains profitable—just not enough to fully offset other financial pressures.
With interest rates higher than they’ve been in years, companies carrying large debt loads could see rising costs in the near future. That’s another factor investors should keep in mind when evaluating the sustainability of Cable One’s dividend.
Valuation and Stock Performance
Cable One’s stock has been in a prolonged downturn, currently trading at $274.77, which is well below its 52-week high of $470.87. Looking at some valuation metrics, there are a few interesting takeaways:
- The price-to-book ratio of 0.86 suggests that shares are trading below the value of the company’s assets. That could indicate an undervalued stock—but only if earnings stabilize.
- The enterprise value-to-revenue ratio of 3.16 shows that the market still assigns value to Cable One’s revenue stream, but investor confidence has dropped.
- The 50-day moving average of $315.23 and the 200-day moving average of $353.41 confirm the stock is still trending downward.
One thing worth noting is that institutional investors still hold a massive 105.8% of the stock, meaning large funds continue to have a stake in the company. But there’s also 15.16% short interest, meaning a significant number of investors are betting the stock will fall further.
Risks and Considerations
⚠️ The payout ratio of over 450% is unsustainable
⚠️ Revenue is declining, with a 6% year-over-year drop
⚠️ The company carries $3.62 billion in debt, putting pressure on financial flexibility
⚠️ The stock is in a clear downtrend, having lost 44% in the past year
⚠️ High short interest suggests investor skepticism
On the positive side, Cable One’s broadband business remains profitable, and operating margins are strong. However, unless revenue stabilizes or debt is reduced, the dividend could be at risk.
Final Thoughts
Cable One’s 4.29% dividend yield may look appealing, but the underlying numbers suggest caution. The payout ratio of 457% is a major red flag, signaling that the company is paying out far more than it earns. With declining revenue and a massive debt load, maintaining the dividend will be a challenge unless financial conditions improve.
For investors focused on dividends, this stock comes with a higher level of risk than usual. While the valuation metrics suggest it’s cheap compared to its historical levels, that doesn’t necessarily make it a safe bet. Investors should closely monitor upcoming earnings reports to see if the company can turn things around—or whether a dividend cut is on the horizon.
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