The 1 Move That Would Make Me a Verizon Stock Bull The Motley Fool

That works out to a consensus recommendation of Buy, with tepid conviction. Before we proceed with the reasons for this year’s increase, there are two things worth mentioning here. Firstly, the debt maturity profile is heavily weighted beyond the 2025 fiscal year. In the following two sections, I will first cover the relative valuation and dividends and will then proceed to the last two points. Going through the worst performers in a large index from time to time has its merits and risks for that matter.

It’s important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we’ve identified 2 warning signs for Verizon Communications that you should be aware of before investing.

1/22: Verizon declares quarterly dividend

With that growth, it is the only company to deliver investors a positive return, with stockholders more than doubling their investment over the last five years. Still, the current payout of $2.61 per share means Verizon must spend about $11 billion per year to fund the dividend. With the stock down by about 40% over the last five years, the dividend yield has risen to 7.8%.

Full 7th Floor, 130 West 42nd Street,
New York,
NY 10036. He’s also written for Esquire magazine’s Dubious Achievements Awards. Of the 29 analysts covering AT&T tracked by S&P Global Market Intelligence, 10 call it a Strong Buy, two have it at Buy, 15 say it’s a Hold and two rate it at Strong Sell.

Industry Positioning

We use a 9% discount rate because of the higher current dividend yield. The projected dividend growth rate is a little higher than its 10-year average. While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. The last payment was quite easily covered by earnings, but it made up 108% of cash flows. The company might be more focused on returning cash to shareholders, but paying out this much of its cash flow could expose the dividend to being cut in the future. On a free cash flow (FCF) basis, Verizon has a dividend payout ratio of ~54%.

Verizon continued to pay its dividend during the most challenging period in the last 100 years. Most businesses and industrials were cutting or suspending their dividend payments the previous year during the COVID-19 pandemic; Verizon continued to pay its dividend. The company increased its dividend by ~ 2% in September this year. The dividend was raised this year from $0.6275 to $0.64 per share. That tells us everything I need to know about the dividend policy and dividend safety focus, but we do not like the slower growth compared to its five-year average. But, with its increasing costs in capex and costly failures with non-telecom businesses, AT&T slashed its dividend in 2022 after 35 consecutive years of increases.

Verizon Communications Inc Optimized Dividend Chart

The retirement accounts are composed of HSA investments, ROTH and Traditional IRAs, as well as our work 401(k) accounts. In total, the retirement accounts brought in a total dividend income amount of $379.48 or 22% of the dividend income total, similar to last month. $1,000+ in taxable dividends is great to see, but would prefer an average of at least $2,000 per month.

• The slower 5-year dividend growth shows that earnings and overall company growth are also slowing.
• You will also find an interesting calculation before going deep into the report.
• Dividend Income is the fruit from the labor of investing your money in the stock market.
• This may not be a well-loved stock for investors today, but there’s a lot to like for long-term investors, and that’s why I think this is a top dividend stock today.
• Verizon Communications’s most recent quarterly dividend payment of $0.6525 per share was made to shareholders on Tuesday, August 1, 2023.

However, Americans continue to spend like there is no tomorrow. Investing, not stopping and consistently adding dividend income. Additionally, with AT&T’s reduced but still generous dividend, its decline has continued. That likely means telecoms will have to follow T-Mobile’s example of no dividend payments to achieve positive returns. Nonetheless, amid high debts and substantial capex costs, the stock price continues to drop. That means the dividend could be the cause of Verizon’s negative return.

Is Verizon (VZ) a Good Dividend Stock

Since then, Verizon has acquired MCI Worldcom, Alltel, and smaller wireless companies. Verizon also acquired AOL and parts of Yahoo, which were sold in 2021. In addition, Verizon has been slowly divesting its legacy wireline operations but still retains millions of connections in the northeast.

This trading strategy invovles purchasing a stock just before the ex-dividend date in order to collect the dividend and then selling after the stock price has recovered. Yes, the big telecom stocks of AT&T (T) and Verizon (VZ) are still packing a nice punch and being reinvested back into the stock, with yields well over 7%. We earned over $175 in taxable dividends from the two stocks.

The List Of Dividend Contenders In 2020

In his current role at Kiplinger, Dan writes about equities, fixed income, currencies, commodities, funds, macroeconomics, demographics, real estate, cost of living indexes and more. A long-time financial journalist, Dan is a veteran of SmartMoney, MarketWatch, CBS MoneyWatch, InvestorPlace and DailyFinance. As a senior writer at AOL’s DailyFinance, Dan reported market news from the floor of the New York Stock Exchange and hosted a weekly video segment on equities. As for VZ stock’s prospects for beating the market over the next 12 to 18 months, Wall Street is split.

• Thus, the company is in an excellent position and will continue to cover the dividends and pay its debt.
• The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential.
• $1,000+ in taxable dividends is great to see, but would prefer an average of at least $2,000 per month.

On top of these new markets, Verizon could bundle streaming services with wireless phone and home service. It’s starting to include some of these bundles, but it makes sense to lean into them as the company adds more services beyond phone connectivity. Over the last decade, Verizon has been competing with a handful of other companies to provide wireless cellphone service, but little else. Verizon tried to tack on Yahoo! and AOL as adjacent assets, while AT&T (T 0.52%) tried to combine with Time Warner.

AT&T: Dividend Cut, but Better Long-Term Forecast

However, Verizon Communications has only grown its earnings per share at 4.9% per annum over the past five years. Growth of 4.9% per annum is not particularly high, which might explain why the company is paying out a higher proportion of earnings. This isn’t Day trading patterns bad in itself, but unless earnings growth pick up we wouldn’t expect dividends to grow either. Schedule monthly income from dividend stocks with a monthly payment frequency. A steady dividend schedule is a reflection of the financial strength of a stock.

Will Healy has no position in any of the stocks mentioned. The Motley Fool recommends T-Mobile US and Verizon Communications. https://investmentsanalysis.info/ Vladimir Dimitrov is a former strategy consultant with a professional focus on business and intangible assets valuation.