Verizon Communications Inc. (VZ): A Top Dividend Contender?
Wednesday, Nov 13, 2024 7:53 pm ET
4min read Verizon Communications Inc. (VZ) has long been a favorite among income-oriented investors, thanks to its consistent dividend payments and steady growth. With a current annual dividend of $2.71 per share and a yield of 6.59%, VZ continues to be a top contender in the dividend space. But is it still the best choice for investors seeking reliable income?
VZ's dividend history is a testament to its financial stability and commitment to shareholders. The company has paid dividends quarterly since 2005, with a consistent growth rate. Over the past five years, VZ's dividend has grown at an average annual rate of 2.02%, while the historical CAGR over 20 years is 2.70%. This growth rate is competitive with other telecom carriers such as AT&T (T) and T-Mobile US (TMUS), which have 5-year dividend growth rates of 1.98% and 0.00%, respectively. However, VZ's 20-year CAGR of 2.70% is higher than T's 2.45% and TMUS's 1.64%.
VZ's dividend payout ratio has been relatively stable over the past decade, averaging around 50%. This indicates a balance between rewarding shareholders and reinvesting in the company. In comparison, AT&T Inc. (T) has a higher payout ratio, averaging around 70%, while T-Mobile US Inc. (TMUS) has a lower ratio, averaging around 30%. VZ's dividend growth rate has been steady, with a 5-year CAGR of 2.02% (Source: Dividend.com). While VZ's dividend yield is attractive, investors should consider its payout ratio and growth rate in relation to other telecom carriers and their own investment objectives.
One strategy employed by some VZ investors is dividend capture, buying shares one day before the ex-dividend date to capture the dividend and potentially benefit from the stock's recovery. Historically, this strategy has been effective, with the stock price typically recovering within a few days after the ex-dividend date, with a yield on cost ranging from 1.63% to 1.70%. However, this strategy carries risks, and investors should carefully evaluate their own risk tolerance and investment goals.
Analysts' price targets and ratings can provide valuable insights into VZ's dividend potential. According to the data, the average price target for VZ is $45.00, with a high of $50.00 and a low of $38.00 (Number 2). This suggests that analysts are generally bullish on VZ's prospects, which could indicate a positive outlook for the company's dividend. Additionally, the average rating for VZ is a 'Buy' or 'Strong Buy' (Number 2), further supporting the notion that analysts view VZ as a strong dividend contender.
In conclusion, Verizon Communications Inc. (VZ) remains a top dividend contender, with a strong track record of consistent payouts and steady growth. Its attractive yield, competitive growth rate, and stable payout ratio make it an appealing choice for income-oriented investors. However, investors should consider the company's overall financial health and market performance, as well as their own risk tolerance and investment goals, when evaluating VZ's dividend appeal. The dividend capture strategy may be an attractive option for some investors, but it carries its own risks and should be carefully considered. Ultimately, VZ's status as a top dividend contender is well-earned, and its dividend history and growth prospects make it a compelling choice for investors seeking reliable income.
VZ's dividend history is a testament to its financial stability and commitment to shareholders. The company has paid dividends quarterly since 2005, with a consistent growth rate. Over the past five years, VZ's dividend has grown at an average annual rate of 2.02%, while the historical CAGR over 20 years is 2.70%. This growth rate is competitive with other telecom carriers such as AT&T (T) and T-Mobile US (TMUS), which have 5-year dividend growth rates of 1.98% and 0.00%, respectively. However, VZ's 20-year CAGR of 2.70% is higher than T's 2.45% and TMUS's 1.64%.
VZ's dividend payout ratio has been relatively stable over the past decade, averaging around 50%. This indicates a balance between rewarding shareholders and reinvesting in the company. In comparison, AT&T Inc. (T) has a higher payout ratio, averaging around 70%, while T-Mobile US Inc. (TMUS) has a lower ratio, averaging around 30%. VZ's dividend growth rate has been steady, with a 5-year CAGR of 2.02% (Source: Dividend.com). While VZ's dividend yield is attractive, investors should consider its payout ratio and growth rate in relation to other telecom carriers and their own investment objectives.
One strategy employed by some VZ investors is dividend capture, buying shares one day before the ex-dividend date to capture the dividend and potentially benefit from the stock's recovery. Historically, this strategy has been effective, with the stock price typically recovering within a few days after the ex-dividend date, with a yield on cost ranging from 1.63% to 1.70%. However, this strategy carries risks, and investors should carefully evaluate their own risk tolerance and investment goals.
Analysts' price targets and ratings can provide valuable insights into VZ's dividend potential. According to the data, the average price target for VZ is $45.00, with a high of $50.00 and a low of $38.00 (Number 2). This suggests that analysts are generally bullish on VZ's prospects, which could indicate a positive outlook for the company's dividend. Additionally, the average rating for VZ is a 'Buy' or 'Strong Buy' (Number 2), further supporting the notion that analysts view VZ as a strong dividend contender.
In conclusion, Verizon Communications Inc. (VZ) remains a top dividend contender, with a strong track record of consistent payouts and steady growth. Its attractive yield, competitive growth rate, and stable payout ratio make it an appealing choice for income-oriented investors. However, investors should consider the company's overall financial health and market performance, as well as their own risk tolerance and investment goals, when evaluating VZ's dividend appeal. The dividend capture strategy may be an attractive option for some investors, but it carries its own risks and should be carefully considered. Ultimately, VZ's status as a top dividend contender is well-earned, and its dividend history and growth prospects make it a compelling choice for investors seeking reliable income.
Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.