A Comprehensive Analysis of Verizon Communications Inc's Dividend History, Yield, Growth, and Sustainability
Verizon Communications Inc (VZ, Financial) recently announced a dividend of $0.67 per share, payable on 2023-11-01, with the ex-dividend date set for 2023-10-06. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into Verizon Communications Inc's dividend performance and assess its sustainability.
What Does Verizon Communications Inc Do?
Verizon Communications is primarily a wireless business (it provides about 70% of service revenue and nearly all operating income). It serves about 92 million postpaid and 22 million prepaid phone customers (following the acquisition of Tracfone) via its nationwide network, making it the largest U.S. wireless carrier. Fixed-line telecom operations include local networks in the Northeast, which reach about 25 million homes and businesses and serve about 8 million broadband customers. Verizon also provides telecom services nationwide to enterprise customers, often using a mixture of its own and other carriers' networks.
A Glimpse at Verizon Communications Inc's Dividend History
Verizon Communications Inc has maintained a consistent dividend payment record since 1985. Dividends are currently distributed on a quarterly basis. Verizon Communications Inc has increased its dividend each year since 2000. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 23 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Verizon Communications Inc's Dividend Yield and Growth
As of today, Verizon Communications Inc currently has a 12-month trailing dividend yield of 8.24% and a 12-month forward dividend yield of 8.38%. This suggests an expectation of increased dividend payments over the next 12 months.
Verizon Communications Inc's dividend yield of 8.24% is near a 10-year high and outperforms than 87.44 of global competitors in the Telecommunication Services industry, suggesting that the company's dividend yield stands out as an attractive proposition for income investors.
Over the past three years, Verizon Communications Inc's annual dividend growth rate was 2.00%. Extended to a five-year horizon, this rate increased to 2.10% per year. And over the past decade, Verizon Communications Inc's annual dividends per share growth rate stands at 2.40%.
Based on Verizon Communications Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Verizon Communications Inc stock as of today is approximately 9.14%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Verizon Communications Inc's dividend payout ratio is 0.52.
Verizon Communications Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Verizon Communications Inc's profitability 7 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Verizon Communications Inc's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Verizon Communications Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Verizon Communications Inc's revenue has increased by approximately 0.70% per year on average, a rate that underperforms than approximately 63.54% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Verizon Communications Inc's earnings increased by approximately 2.90% per year on average, a rate that underperforms than approximately 56.38% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -2.60%, which underperforms than approximately 70.19% of global competitors.
Concluding Remarks
Verizon Communications Inc's strong dividend history, attractive yield, and consistent growth make it a compelling option for income investors. However, its payout ratio, profitability, and growth metrics warrant close monitoring to ensure the sustainability of its dividends. As the telecommunications industry continues to evolve, it remains to be seen how Verizon Communications Inc will leverage its strengths to maintain its dividend performance.
GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
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