Finally. It looks like all the dividend sellers have burned off, and we can finally start the push up again. This should be a $38 stock right now. With the iPhone coming, an increased div when Wireless pays off it's debt, and with people having cash to spend again, I can see the 40's or 50's by late 2010.
Yes but I think the rate rising 8-12 months out are worse for Bonds and CDs (somewhat illiquid due to large bid/ask spreads for the aaverage investor) than something as liquid as a stock. Although rising rates are bad for BOTH, VZ has an advantage, VZ can RAISE the divvy and has shown it likes to raise it every few quarters so an investor feels OK about holding it. Bonds simply don't offer that option of an increasing payout. Next year at this time we have a 50cent div per quarter IMO.
I feel more comfortable with VZ as my fixed income play than a bond. But I am fairly risk tolerant.
You seemed to make sense.
One question though. You mentioned "...in this rising interest (rate) environment...". Isn't that a rising interest rate environment is bearish for VZ? The divvy then has competitor (CD's with higher rates, etc.), and borrowing cost for VZ?
There is always risk to capital, but VZ has a very consistant track record of RAISING the dividend which acts as an inflation hedge for both the stock price floor and the dividend. That is a perk that a fixed income instrument doesn't offer. Also, there are no penalties for getting your money aside from small trading fees.
I think that the 6.4% in VZ is much more attractive than a 5% CD or bond, especially in a rising rate environment.
VZ is a buy.
That's correct. But your "investment capital" a.k.a. your original deposit is not at risk and it's backed by the government. I don't believe a stake in VZ would be under the same protections.
At peak this is only a $32 - $33 a share stock. It only gets to this peak just prior to ex div date. Don't fool youself into anything else. You are not a good investor if you are thinking $40-$50. Unless you r a pumper.
1. If VZ had the runup every other stock has had the last few months, they would easily be in the 40's or 50's.
2. When the Wireless debt repayments become disposable income, a portion of that income will go to shareholders in the form of a dividend. Using the same payout ratio, we're looking at a $1.00+ quarterly dividend. If that dividend equaled 6%, that would be a $66 stock price.
3. This is all factored in without the iPhone. The iPhone being sold by Verizon easily doubles profits, thus doubling the stock price from $29 to $58.
Or is all this just dreamy?