I do not expect the next dividend increase to be much different. Management will likely increase the dividend by another 2.0% or so. Verizon invests heavily in its traditional telecommunications businesses. While its major competitor, AT&T, focused on growing into other areas.
If you are interested in reading about another dividend growth stock please readWalgreens Boots Alliance – An Undervalued Dividend Aristocrat. If we average the three fair price targets of $66.05, $57.21, and $43.60, we obtain a reasonable, fair price of $55.62 per share. This gives Verizon a possible upside of 5.0% from the current price of $52.99.
Over the past 22 years, the company has become one of the world’s technology and communications leaders. AT&T has thrown the first stone, dropping the AT&T unlimited plan how much to start swing trading $5 per month below Verizon’s. If a price war ensues, there could be trouble for profit margins — leaving Verizon’s wireless market share vulnerable to competitors.
This value is a good starting yield for dividend growth investors—especially those investors who are leaving the bond market looking for higher yields. The yield is even higher than the start of 2021, when Verizon was on theDogs of the Dow 2021list. Income-driven investors may want a 4.5% yield or higher. So, Verizon does meet that criterion, and it is a good dividend stock for them. The shares of Verizon are trading for under 10 times 2021 earnings and yield 4.7% from the dividend. Those are great values in any market, but I think Verizon is entering a growth phase as 5G wireless reaches into the home and allows for innovations that weren’t possible with slower wireless technology.
Ex-dividend typically falls on or around the 9th day of the month. So, as a shareholder, you can start those months out on a positive note. I expect dividend growth to remain low, but consistent. Most importantly, the dividend appears to have a high degree of safety from a possible reduction. Let’s dive into a Verizon stock analysis and Verizon dividend review. Prior to this date, the stock was trading as Bell Atlantic.
These numbers have shown promising QoQ improvement indeed, thereby pointing to the stock’s overly-beaten state at extreme 11Y lows. EPS expansion QoQ after the divestiture of Warner Brothers in H1’22, pointing to a potential turnabout in its forward execution and profitability. VZ remains an interesting dividend pick due to its 11Y low prices, triggering an attractive 7.02% yield by 2024, against its 4Y average of 4.57%. At the beginning of 2020, Verizon shares were trading at $61.38. By the beginning of March, the stock had dropped to $55.16 after news of the virus spreading in China prompted concerns about a U.S. pandemic.
VZ’s net income and EPS have declined at CAGRs of 11.9% and 12.1%, respectively, over the past three years. Analysts expect VZ’s revenues to decline 2.5% in the current quarter, 1.6% in the next quarter, and 1.1% in the next year. However, its revenue is expected to increase 4% year-over-year to $133.37 forex binary options systems billion in the current year. The company’s EPS is expected to grow 5.8% in the current quarter, 2.3% in the next quarter, and 9.6% in the current year. The 2010s saw Verizon’s value mostly stabilize, as it competes with a slew of other companies over the fifth generation of wireless services.
Keep in mind that just because you’re not physically at work doesn’t mean the company’s data network isn’t still active. It also trades at 11.1 times consensus forward FY 2021 normalized P/E and 10.9 times consensus forward FY 2022 normalized P/E. This implies that VZ’s valuations are rather attractive on an absolute basis, given its low-teens P/E ratios and high-teens EV/EBITDA multiples. Interestingly, Verizon has caught the eye of Warren Buffett, which has led to the company being labeled as a “value stock” by certain investors. I assess if Verizon has characteristics of a value stock in the next section. Verizon’s year-to-date stock price performance is the worst among its peers, with its shares down -4.0% since the start of the year.
Verizon Dividend Yield
Where I get to the facts, risks, and opportunities for each company’s stock and dividend. Achieve financial independence and retire early by using dividend growth investing. A dividend is a payment made by a corporation to its stockholders, usually out of its profits. Dividend stocks companies pay out a portion of their earnings to certain groups of shareholders on a regular basis. For the past ten years, Verizon has had revenue increasing at a Compound Annual Growth Rate of 1.6%, which is a meager growth rate considering the size of Verizon.
VZ has been popular among investors looking to hedge against the stock market volatility due to its dividend-paying history and stable returns. However, analysts expect its revenues to decline in the current quarter. So, we think it could be wise to wait for a better entry point in this stock.
Because Verizon stock is a favorite holding among many dividend stock investors. Earnings have seen a much better growth rate when compared to revenue. EPS has grown 9.6% CAGR annually for the past ten years. And over the past five-year, EPS has had a CAGR of 6.0%.
As a dividend stock investor, stock valuation is an important consideration. On the other hand, you can’t always wait for a stock to go on sale when building out a dividend stock portfolio. As we know, the company pays a quarterly cash dividend.
Verizon Stock Forecast
Let’s take a closer look at what you need to know about Verizon Communications, including the reasons you may or may not want to invest in the stock during these months of surging prices. Income investors reaching for defensive plays against the next recession should be looking for sustainability and growth potential in each company they consider for their portfolio. What really drove the revenue increase was higher pricing for consumers, who are upgrading to unlimited 5G connections at a faster rate than expected. Verizon has long paid steady dividends, and it’s the strongest player in the U.S. 5G battle.
- Verizon isn’t reinventing the wheel – it’s simply upgrading its existing assets to serve a more fast-paced, connected world.
- It’s saving money by not having massive stakes in paid cable television services, video production, nor streaming services like Hulu.
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- Revenue growth hasn’t been very meaningful, but keep in mind that the figures above don’t include any real impact from 5G.
- The shares of Verizon are trading for under 10 times 2021 earnings and yield 4.7% from the dividend.
- “We continue to believe the market is overly focused on Verizon’s struggle to add postpaid consumer wireless customers in recent quarters,” he wrote in a commentary.
If the price goes higher, then the dividend yield goes lower. Verizon also boasts consensus forward FY 2021 and FY 2022 dividend yields of 4.5% and 4.6%, respectively. The company is expected to generate ROAs of 6.3% and 6.1% for the current fiscal year and the next fiscal year, respectively. Also, Verizon has been an attractive dividend stock for most of its trading history, offering a trailing dividend yield in excess of 4% in the past decade as per the chart below. In this section will look at how well Verizon has grown earnings and revenue throughout the years. When evaluating a company, these two metrics are at the top of my list to consider.
Verizon Communications Dividend Payout Ratio
Take a look at myReview of the Simply Investing Report. I also provide a Review of the Simply Investing Course.Note that I am an affiliate of Simply Investing. Verizon’s current dividend yield is 39 basis points higher than its own 5-year average dividend yield of 4.44%. I like to look at this metric because it gives me a good idea if a company I am researching is undervalued or overvalued based on the current and 5-year average yield. The reason is that price and dividend yield correlate with one another.
With the upbeat October CPI results and the Fed’s supposed pivot by December, we may see a little more bubbly recovery in the short term as well. Investors who bought stocks during the COVID-19 market crash in 2020 have generally experienced some big gains in the past two years. But there is no question some big-name stocks performed better than others since the pandemic bottom.
Stellar indeed, against T’s estimates of $2.64 and VZ’s $5.08 at the same time. Both T & VZ reported rich Free Cash Flow generation of $4.17B and $5.21B for Q3’22, though notably with -11.8% QoQ/-19.2% YoY decline and -11.7% QoQ/-6.5% YoY decline, respectively. This is due to their elevated capital expenditure of $19.4B and $22.2B over the last twelve months , indicating an increase of 30.7% and 29.1%, sequentially. Naturally, this is assuming that investors are comfortable with VZ’s massive debts of $135.1B and value destruction thus far.
Should You Buy Verizon Communications Inc.?
Or, withstand an earnings drop without having to reduce its dividend. And increase those dividends annually by a consistent amount while maintaining a strong balance books on market crashes sheet. And you will receive your share of the Verizon dividends each time the company pays them. And took the dividend yield down as the stock price went higher.
VZ – The shares of the largest wireless carrier in the U.S., Verizon , have slumped in price over the past year. However, based on its dividend growth history, the company is a popular holding among investors that are seeking stable returns and a hedge against market volatility. But the company’s trailing-12-months levered free cash flow was negative in its latest quarterly report. The last item I like to look at to determine a fair price is the DDM analysis. I factored in a 9% discount rate and a long-term dividend growth rate of 3%. I use a 9% discount rate because of the higher current dividend yield.