Verizon’s (VZ) Dividend is About to get a Little Bigger

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Telecom giant Verizon (VZ) will likely extend its streak of dividend increases this week. The stock currently has a 4.2% yield and the company has boosted its dividend for 12 straight years. VZ stock is up a modest 3.1% on the year.

Technical Analysis

VZ was recently trading at $57.94 down $3.64 from its 12-month high and $5.66 above its 12-month low. InvestorsObserver’s Stock Score Report gives VZ a 75 long-term technical score and a 75 short-term technical score. The stock has recent support above $55 and recent resistance below $59. Of the 16 analysts who cover the stock 5 rate it Strong Buy, 0 rate it Buy, 11 rate it Hold, 0 rate it Sell, and 0 rate it Strong Sell, VZ gets a score of 62 from InvestorsObserver’s Stock Score Report.

Analysts' Thoughts

Utilities are famous for their strong capital programs and Verizon is no exception with a 4.2% yield. Telecom is a highly competitive and slow growing sector. Verizon is only expected to grow earnings by 2.9% per annum over the next five years, so its dividend is a key to keeping investors interested in the stock. VZ has a payout ratio of 51.7% and combined with a dividend that is already yielding 4.2% investors should not look for a huge increase this year. Last year the company boosted its payout by 2.2% and this year’s increase will likely be in the same range. Look for the quarterly distribution to rise from $0.603 to around $0.615 for 2% increase. The stock will trade ex-dividend in the first part of October.

About Verizon Communications Inc.

Verizon is now primarily a wireless business (70% of revenue and nearly all operating income). It serves about 89 million postpaid and 4 million prepaid phone customers and connects another 24 million data devices, like tablets, via its nationwide network, making it the largest U.S. wireless carrier. Fixed-line telecom operations include local networks (12% of revenue) in the Northeast, which reach about 25 million homes and businesses, and nationwide enterprise services (10%). Recent investments, including fiber network construction, have supported the wireless business in addition to expanding traditional fixed-line capabilities. Verizon Media Group, the online media and advertising firm formed with the acquisitions of AOL and Yahoo, provides the remainder of revenue.

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