Verizon Delivers More Good News for Growing Dividend Investors
September 6, 2018 by Jon C. OggIn the converging world of telecom, data and media, there have been some issues over how investors would evaluate the super-high dividends offered to the major telecom players. Verizon Communications Inc. (NYSE: VZ) has in some ways not changed as much with acquisitions of Yahoo and AOL as AT&T Inc. (NYSE: T) with its acquisitions of DirecTV and of Time Warner.
The message from Verizon appears to be an all-clear sign on its dividend. Verizon just announced that it was raising its dividend for the 12th consecutive year.
The prior quarterly dividend of $0.59 per common share will jump to $0.6025. This will create a dividend yield of 4.47% for any new investor getting in at the current share price of $53.89.
Verizon further said that it has roughly 4.1 billion shares of common stock outstanding and that it had made $4.8 billion in cash dividend payments during the first half of 2018. This new dividend hike to $2.41 on an annualized basis will create a dividend liability of $9.88 billion.
AT&T also has been able to keep raising its dividend each year, but the weaker share performance here gives AT&T a much higher current dividend yield than Verizon. AT&T’s quarterly dividend payout of $0.50 per share and $32.05 share price gives investors a current yield of 6.24%.
Verizon has a market cap of $223 billion, versus about $233 billion for AT&T. The payout ratios based on this year’s expected earnings from the Thomson Reuters consensus estimates vary. AT&T’s $2.00 per share payout is expected to be raised soon, but the consensus estimate of $3.51 in earnings per share would imply that the company is paying out about 57% of its normalized earnings as dividends. Verizon’s new $2.41 annualized payout and $4.66 consensus estimate on earnings per share implies that Verizon will still be paying out just under 52% of its normalized earnings as dividends.
Verizon has a 52-week trading range of $43.97 to $55.21 and a consensus analyst target price from Thomson Reuters of $56.42. AT&T’s 52-week range is $30.13 to $39.80, and it has a consensus target price of $35.37.
The great dividend race continues.
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