Verizon continues to update its network. That’s helping it sign up new users, which should support the high dividend yield.
Meanwhile, the company continues to hold its own as lower demand for new smartphones reduced revenues and earnings in the most recent quarter.
The stock trades at just 8.0 times the company’s 2023 earnings forecast.
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VERIZON COMMUNICATIONS INC. (New York symbol VZ; www.verizon.com) is the second-largest wireless carrier in the U.S. after AT&T, with 143.6 million subscribers (consumers and businesses) as of September 30, 2023.
The stock has come under pressure lately following media reports that its old telephone lines with lead sheathing are contaminating the environment. The company switched to plastic sheathing in the 1950s.
It’s unclear how much Verizon and other telecom providers will have to pay to remove these lines. However, it’s likely the company will spread out costs over many years, which reduces the possibility that it will have to cut the dividend.
With the November 2023 payment, Verizon raised your quarterly dividend by 1.9%, to $0.665 a share from $0.6525. The new annual rate of $2.66 a share yields a very high 7.1%. With this increase, the company has now raised its dividend each year for the past 17 years.
Despite that high yield, the new rate looks sustainable. Verizon’s annual dividend payments will total roughly $11 billion, which is equal to about 60% of its 2023 projected free cash flow (regular cash flow less maintenance capital expenditures) of at least $18 billion.
Dividend Stocks: Verizon’s revenues and earnings remain durable and cheap
Meantime, in the third quarter of 2023, Verizon added 100,000 wireless phone subscribers under long-term contracts (net of cancellations). However, due to lower sales of new phones, revenue fell 2.6%, to $33.34 billion from $34.24 billion a year earlier. Excluding one-time items, per-share earnings fell 7.6%, to $1.22 from $1.32 on higher interest and depreciation charges.
The company will probably earn $4.70 a share in 2023, and the stock trades at just 8.0 times that forecast.
Verizon has raised your dividend by an average of 2.0% annually over the past 5 years. The stock holds a Highest TSI Dividend Sustainability Rating.
Recommendation in Dividend Advisor: Verizon Communications Inc. is a buy.
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The Successful Investor Inc. and its affiliate Successful Investor Wealth Management (referred to hereafter as TSI Network) know that you care how information about you is used and shared, and we appreciate your trust that we will do so carefully and sensibly. This notice describes our privacy policy. By visiting websites owned by or associated with TSI Network, you are accepting the practices described in this Privacy Policy.
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We do not collect or disclose personal information, except when it is provided to us voluntarily by the site/store visitor with their consent.
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We are continuously in the process of improving our sites and services. If any new features or policies require a change to this current policy, we will post a clear notice of this change on pages of our site where the privacy policy appears. The principle behind this privacy policy is to collect information with your knowledge and consent.
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The information we receive from customers helps us personalize and continually improve your online experience at TSI Network. TSI Network may collect personal information online for all legal purposes, which include, but are not limited to:
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