CenturyTel shares rise after it hikes dividend

Monroe, La.-based CenturyTel's shares rose $5.84, or 19 percent, to $37.09 in early afternoon trading. In the past 52 weeks, the stock has traded between $30.55 and $49.91.

Earlier Tuesday, the company said it raised its annual dividend to $2.80 from 27 cents, bringing the new quarterly rate to 70 cents. It also declared a one-time dividend of 63.25 cents to adjust its second-quarter dividend to the new rate.

And CenturyTel said it expects to complete its buyback program by late this year or early in 2009 instead of Sept. 30, 2009, as initially planned.

Raymond James analyst Frank G. Louthan IV raised his rating on the company's shares to "Outperform" from "Market Perform" on the news, saying the moves will enhance shareholder value.

Goldman Sachs analyst Jason Armstrong, meanwhile, removed the stock from its Americas Sell list and upgraded it to "Neutral."

Armstrong wrote in a note to investors the "significant dividend hike should reduce the valuation gap" between CenturyTel and its closest peers, Windstream Corp. and Citizens Communications Co.

CenturyTel also said it expects to meet or beat its second-quarter adjusted profit outlook of 78 to 82 cents per share. Analysts polled by Thomson Financial expect a profit of 80 cents per share.