Published Thu, 09 Aug 2018 16:19:24 -0400 on Seeking Alpha
As Verizon Communications (VZ) approaches the annual dividend hike in September, the temptation is to encourage the company to make a big hike. After all, tax reform boosted profits and cash flows this year beyond the normal level. My recommendation though is for the wireless giant to focus on balance sheet improvement to stave off future competition from a converging tech world so that at least the stock is good for the large dividend.
Image Source: Verizon website
Dividend Trend Over the last decade, Verizon has regularly hiked the dividend in September. The company has recently hiked the payout by slightly above 2% per year. Last year, Verizon hiked the dividend by 1.25 cents, or 2.2%, on September 7.
With the current quarterly dividend of $0.59, a similar 2.2% hike would equate to 1.30 cents. The company is likely to choose 1.25 cents for a new quarterly dividend of $0.6025 placing the dividend yield up around 4.6%.
VZ Dividend data by YCharts
Along with the Q4 earnings report in January, Verizon established the tax reform benefit as up to $3.5 billion in additional operating cash flows. Some additional expenses and higher capex will offset the ultimate free cash flow growth.
The temptation is for Verizon to increase the yield in excess of the traditional 2%+ hike due to the big financial boost from tax reform. The wireless giant earned $3.74 per share last year and analysts currently target a big 24% EPS boost to over $4.60 per share this year... Read more
|Stock name||Last trade||P/E||Earnings/Share||Dividend/Share||Dividend yield|
Older articles featuring At&t (T):Retirement Strategy: An Obvious Future Dividend Aristocrat, But It Is Too Expensive To Buy Right Now
My Dividend Growth Portfolio Half Time Report: 38 Holdings, 1 Buy, 3 Sells
3 High-Dividend Stocks Paying Up to 15.6%
All Weather Dividends: 9 Hot Buys For July And 1 Sell
Nicholas Ward's Dividend Growth Portfolio: June 2020 Update
Retirement Strategy: The Pandemic Is Still Here, So Is Dividend Growth Investing So Let's Update 'PRIP'
Dividend Champion And Contender Highlights: Week Of July 5
Techniques To Avoid Dividend Cuts
5 Reasons Why Dividend Investing Beats Capital Gains Investing
Blue Chip DRiP Portfolio: June Dividends And Covered Calls Update