If you are an income investor, then Verizon Communications Inc (NYSE:VZ) should be on your radar. Verizon Communications Inc., through its subsidiaries, offers communications, information, and entertainment products and services to consumers, businesses, and governmental agencies worldwide. Over the past 10 years, the US$198.58B market cap company has been growing its dividend payments, from $1.72 to $2.36. Currently yielding 4.91%, let’s take a closer look at Verizon Communications’s dividend profile. View our latest analysis for Verizon Communications
What Is A Dividend Rock Star?
It is a stock that pays a consistent, reliable and competitive dividend over a long period of time, and is expected to continue to pay in the same manner many years to come. More specifically: Its annual yield is among the top 25% of dividend payers It consistently pays out dividend without missing a payment or significantly cutting payout Its dividend per share amount has increased over the past It can afford to pay the current rate of dividends from its earnings It has the ability to keep paying its dividends going forward
High Yield And Dependable
Verizon Communications currently yields 4.91%, which is high for Telecom stocks. But the real reason Verizon Communications stands out is because it has a high chance of being able to continue to pay dividend at this level for years to come, something that is quite desirable if you are looking to create a portfolio that generates a steady stream of income.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. VZ has increased its DPS from $1.72 to $2.36 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes VZ a true dividend rockstar. The company currently pays out 30.77% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect VZ’s payout to increase to 52.29% of its earnings, which leads to a dividend yield of around 5.08%. However, EPS is forecasted to fall to $4.52 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
Verizon Communications ticks all the boxes for what I look for in a dividend stock. If you are looking to build an income focused portfolio, this could be one to include. However, given this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three key aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for VZ’s future growth? Take a look at our free research report of analyst consensus for VZ’s outlook.
- Valuation: What is VZ worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether VZ is currently mispriced by the market.
- Other Dividend Rockstars: Are there strong dividend payers with better fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.