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Will Verizon (VZ) Benefit From Steady Dividend Hike Policy?
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Verizon Communications Inc. (VZ - Free Report) recently hiked its quarterly dividend payout by about 2% to 66.50 cents per share or $2.66 on an annualized basis. This portrays the company’s solid balance sheet position on the back of a faster 5G rollout across the country and healthy fixed wireless broadband momentum.
Based on the closing price of $33.45 as of Sep 8, the proposed dividend affirms a yield of 7.95%. A steady dividend payout is part of VZ’s long-term strategy to provide attractive risk-adjusted returns to its stockholders. Additionally, healthy dividend increases at periodic intervals have been one of its key strengths.
This is the 17th consecutive year the company has increased its quarterly dividend. The current hike reflects its inherent financial strength and strong cash flow generated from continued focus on high-margin businesses and healthy execution of operating plans. Verizon has a dividend payout rate of 52.8%. The rate has increased steadily over the past few quarters, indicating that the company is sharing more of its earnings with stockholders.
To boost its liquidity, Verizon has been looking to slash costs through employee reduction, active management of near-term maturities, optimization of overall funding footprint and lowering the cost of capital. It currently has a debt-to-capital ratio of 0.61 compared with 0.57 of the sub-industry.
Verizon is likely to benefit from a disciplined network strategy backed by a customer-centric business model and diligent execution of operational plans. In addition, the company is focused on making necessary capital expenditures to support the increased demand for network traffic. The continued build-out of OneFiber and C-Band spectrum expansion will expand the reach and capacity of its 5G Ultra Wideband network.
Verizon is offering various mix-and-match pricing in wireless and home broadband plans, which has led to solid customer additions with increased adoption of 5G devices and premium unlimited plans. Moreover, in the enterprise and wholesale business, Verizon is changing its revenue mix toward newer growth services like cloud, security and professional services.
The company has further expanded Fios Forward to support digital inclusion and provide opportunities for underserved households to thrive in the digital world. With no data caps, Fios customers can experience faster upload and download than comparable plans. The company’s focus on online content delivery, mobile video and online advertising should drive growth.
The stock has lost 21.8% in the past year compared with the industry’s decline of 15.3%.
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank #2 (Buy), is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 18.7% and delivered an earnings surprise of 12.8%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
AudioCodes Ltd. (AUDC - Free Report) is a Zacks Rank #2 stock. It has a long-term earnings growth expectation of 4.3% and delivered an earnings surprise of 2.2%, on average, in the trailing four quarters.
Headquartered in Lod, Israel, AudioCodes offers advanced communications software, products, and productivity solutions for the digital workplace. It provides a broad range of innovative products, solutions and services that are used by large multi-national enterprises and leading tier-1 operators around the world.
Motorola Solutions, Inc. (MSI - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 5.62%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 5.58%.
Motorola provides services and solutions to government segments and public safety programs, along with large enterprises and wireless infrastructure service providers. It develops and services both analog and digital two-way radio, voice and data communications products and systems for private networks, wireless broadband systems and end-to-end enterprise mobility solutions to a wide range of enterprise markets.
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Will Verizon (VZ) Benefit From Steady Dividend Hike Policy?
Verizon Communications Inc. (VZ - Free Report) recently hiked its quarterly dividend payout by about 2% to 66.50 cents per share or $2.66 on an annualized basis. This portrays the company’s solid balance sheet position on the back of a faster 5G rollout across the country and healthy fixed wireless broadband momentum.
Based on the closing price of $33.45 as of Sep 8, the proposed dividend affirms a yield of 7.95%. A steady dividend payout is part of VZ’s long-term strategy to provide attractive risk-adjusted returns to its stockholders. Additionally, healthy dividend increases at periodic intervals have been one of its key strengths.
This is the 17th consecutive year the company has increased its quarterly dividend. The current hike reflects its inherent financial strength and strong cash flow generated from continued focus on high-margin businesses and healthy execution of operating plans. Verizon has a dividend payout rate of 52.8%. The rate has increased steadily over the past few quarters, indicating that the company is sharing more of its earnings with stockholders.
To boost its liquidity, Verizon has been looking to slash costs through employee reduction, active management of near-term maturities, optimization of overall funding footprint and lowering the cost of capital. It currently has a debt-to-capital ratio of 0.61 compared with 0.57 of the sub-industry.
Verizon is likely to benefit from a disciplined network strategy backed by a customer-centric business model and diligent execution of operational plans. In addition, the company is focused on making necessary capital expenditures to support the increased demand for network traffic. The continued build-out of OneFiber and C-Band spectrum expansion will expand the reach and capacity of its 5G Ultra Wideband network.
Verizon is offering various mix-and-match pricing in wireless and home broadband plans, which has led to solid customer additions with increased adoption of 5G devices and premium unlimited plans. Moreover, in the enterprise and wholesale business, Verizon is changing its revenue mix toward newer growth services like cloud, security and professional services.
The company has further expanded Fios Forward to support digital inclusion and provide opportunities for underserved households to thrive in the digital world. With no data caps, Fios customers can experience faster upload and download than comparable plans. The company’s focus on online content delivery, mobile video and online advertising should drive growth.
The stock has lost 21.8% in the past year compared with the industry’s decline of 15.3%.
Image Source: Zacks Investment Research
Verizon presently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Key Picks
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank #2 (Buy), is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 18.7% and delivered an earnings surprise of 12.8%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
AudioCodes Ltd. (AUDC - Free Report) is a Zacks Rank #2 stock. It has a long-term earnings growth expectation of 4.3% and delivered an earnings surprise of 2.2%, on average, in the trailing four quarters.
Headquartered in Lod, Israel, AudioCodes offers advanced communications software, products, and productivity solutions for the digital workplace. It provides a broad range of innovative products, solutions and services that are used by large multi-national enterprises and leading tier-1 operators around the world.
Motorola Solutions, Inc. (MSI - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 5.62%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 5.58%.
Motorola provides services and solutions to government segments and public safety programs, along with large enterprises and wireless infrastructure service providers. It develops and services both analog and digital two-way radio, voice and data communications products and systems for private networks, wireless broadband systems and end-to-end enterprise mobility solutions to a wide range of enterprise markets.