Winstream's bid to buy Iowa Telecom is reason to sell and move the cash to Otelco.

This week saw the announcement of a deal by Winstream Communications (WIN) to acquire Iowa Telecommunications Services (IWA) for .804 shares of Winstream plus 7.90 dollars for each share held of Iowa. Given the current market pricing of Winstream at 10.57 dollars - this works out to a current approximate valuation of Iowa of 16.40 dollars a share.

Sell your shares of Iowa Telecom (NYSE: IWA).

The current market price of Iowa is trading at approximately 16.45 a share. I'm recommending that shareholders that have been following my recommendations to buy and own Iowa to sell their shares and take their profits.

Year to date the performance of Iowa has been over 27 percent compared to the S&P 500 at 24 percent - while the telecom services index tracked by Standard and Poor's has lost more than 45 percent for the same period.

And for those that have followed my call for the past few years - you've been paid well by Iowa amounting to an annual dividend paid quarterly of over 1.62 dollars per share which at the current price equates to a yield just shy of 10 percent.

Along the way I've been following the emergence of a series of rural phone operators starting with Otelco (OTT) and continuing with a number of other companies including Iowa, Consolidated, Fairpoint, Commonwealth and others. And over the years those that have kept up with my recommendations have been able to get paid well by owning my evolving recommendations of these companies that, at their core, focus on maximizing cashflows from a solid base of cash cow businesses.

However, the key to investing in these companies is to keep up with management and its intentions. Those companies that have stayed true to the focus on shareholders have earned their keep, while those that have deviated have had to be dropped. This has been the case through a series of poor management decisions that led to my taking profits on all but Otelco and Iowa.

The Only Rural Telecom I Recommend

Now that Iowa is set to become part of Winstream - a company that has never passed muster with my stress testing of its assets and management - only Otelco (NASDAQ: OTT) should continue to be bought and owned.

Winstream has followed the path of other non-shareholder-focused companies that concentrate more on deal-making than maximizing revenues and cashflows for its investors. Thus, those that have unknowingly made the assumption that all rural phone companies are the same and have bought Winstream have consistently lost money. Over the past three years Winstream investors have lost more than 23 percent in share price alone. And even with the dividend that's been ever more erratic - investors have still not made up loss of market price in the company.

Even with all its dealmaking, revenues are falling at Winstream. And on an operating basis - crucial to the success of running cash cow businesses - Winstream's profits continue to slip quarter after quarter.

The bottom line: Take your cash off of the table for Iowa and place the proceeds into Otelco, which currently yields a solid and steady dividend yield of 11.23 percent at current market prices. The Alabama-based company continues to build revenues and operating profits - and management continues to keep its word to shareholders of its combination IDS (income deposit shares) to pay them and pay them well.