Where does Verizon (VZ) rank after its 2% announced dividend increase?

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Verizon’s (NYSE: VZ) dividend was increased by 2% with an overall yield above that of the S&P 500 Index at 4.37%. Verizon was created by the merger of Bell Atlantic and GTE in June of 2000. It is a diversified telecom company with a network that covers a population of about 298 million and provides service to nearly 98.2 million.

Verizon has maintained a solid three-year growth rate of dividends of 3.3 percent.

The quarterly dividend for the November payment will be $0.575 versus the prior year rate of $0.565 per share. Verizon Communications Inc. is a member of our Top 100 Dividend Stocks (see below).

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The dividend will be paid at the new higher rate on November 1, 2016, to shareholders of record at close of business on October 2, 2016. Verizon is currently priced at $52.88. Listed in the table below are the quarterly dividend payments since 2010.

Date Quarterly Dividend
10/7/2016 0.575
7/6/2016 0.565
4/6/2016 0.565
1/6/2016 0.565
10/7/2015 0.565
7/8/2015 0.55
4/8/2015 0.55
1/7/2015 0.55
10/8/2014 0.55
7/8/2014 0.53
4/8/2014 0.53
1/8/2014 0.53
10/8/2013 0.53
7/8/2013 0.515
4/8/2013 0.515
1/8/2013 0.515
10/5/2012 0.515
7/6/2012 0.5
4/5/2012 0.5
1/6/2012 0.5
10/5/2011 0.5
7/6/2011 0.488
4/6/2011 0.488
1/6/2011 0.488
10/6/2010 0.488
7/7/2010 0.475
4/7/2010 0.446
1/6/2010 0.446

Analysis of Verizon Communications Inc. is based upon our five key criteria, which include; 

Category Value Score
Dividend Yield 4.37%  49
Dividend Growth (3-6 year avg) 3.1%  333
Forward P/E 11.81  48
S&P Financial Rating BBB+  160
Beta 0.70  50
Total Score    640

Additional Information on P/S ratio and historical yield;

% Yield 3 Year Div. Growth Rate 6 Year Div. Growth Rate SPS 2016 P/S Ratio 10 yr P/S Low 10 yr P/S High 5 yr lowest Yield % 5 yr max Yield %
4.37% 3.3 2.9% 31.60 1.67 0.87 1.88 3.82% 5.55%

Final Analysis;   

Positives;

  • Verizon’s dividend yield is below that of the S&P 500 Index.
  • Verizon maintains a 3 year dividend growth rate of 3.3%.
  • Verizon maintains a credit rating of BBB+. This is investment grade.
  • Verizon’s forward P/E ratio is just over 11, below that of the market.
  • Verizon has paid out a dividend consecutively for the past 23 years.
  • Verizon maintains a beta of 0.70, lower than the average company.

Negatives;

  • Verizon is trading at the top of its ten-year average price/sales (P/S) range.

The carrier also reported $1.01 EPS for the quarter, beating analysts’ consensus estimates of $0.99 by $0.02. Verizon Communications earned $30.90 billion versus expectations of $31.08 billion. The divestiture of its enterprise landline business to Frontier Communications hurt revenue.It posted its second consecutive quarter of soft wireless customer growth as the firm lost 36,000 net postpaid phone customers. Verizon is the clear leader in the industry with 112 million retail customers.

Based on the firm’s high dividend yield, low forward P/E, high credit rating and low beta, Verizon Communications Inc. qualifies as a member of our  Top 100 Dividend Stocks list. 

Verizon Communications Inc. Dividend Yield Chart (Click to enlarge)


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Chart Explanation:  Dividend growth stocks may be viewed favorably when the current yield is above historical readings for the past 5 years.

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