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Verizon (VZ) Rewards Shareholders With 2% Dividend Hike

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Verizon Communications Inc. (VZ - Free Report) recently announced a 2% hike in its quarterly dividend payout to 62.75 cents per share or $2.51 on an annualized basis. This is rather encouraging, given the fact that the broader market sentiments were on the downtrend as a surge in fresh coronavirus cases fueled apprehensions of further economic slowdown.

Based on the closing price of $60.61 as of Sep 3, the proposed dividend affirms a yield of 4.1%. A steady dividend payout is part of the long-term strategy of Verizon to provide attractive risk-adjusted returns to its stockholders. Additionally, healthy dividend increases at periodic intervals have been one of its key strengths.

Notably, this is the 14th consecutive year that 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.

With one of the most efficient wireless networks in the United States, Verizon continues to deploy the latest 4G LTE Advanced technologies to deliver faster peak data speeds and capacity for customers, driven by customer-focused planning, disciplined engineering and constant strategic investment. Verizon has been aggressively forging ahead to expand its fiber optics networks to support 4G LTE and upcoming 5G wireless standards as well as wireline connections. The company remains focused on making necessary capital expenditures in order to support increased demand for network traffic.

Verizon is likely to benefit from a disciplined network strategy, including accelerated 5G deployment despite economic uncertainties stemming from the COVID-19 crisis. The wireless operator is building the 5G home solution and mobile edge computing on the same network and expects to witness strong momentum heading into the second half of 2020. At the same time, Verizon is focusing on build-out of its 5G Ultra Wideband network, deployment of fiber assets across the country and shift toward Intelligent Edge Network architecture.

Markedly, Verizon was the highest bidder in the latest spectrum auction for the 3550-3650 MHz bandwidth held by Federal Communications Commission on Aug 25. The company bid for $1.9 billion to speed up the deployment of 5G services, followed by DISH Network Corporation , Charter Communications, Inc. (CHTR - Free Report) and Comcast Corporation (CMCSA - Free Report) with a bid of $913 million, $464 million and $459 million, respectively.

Verizon has upped the ante by launching the 5G Ultra Wideband network across the country. The 5G Ultra Wideband network uses a millimeter-wave spectrum and is designed to provide customers significantly faster download speed and greater bandwidth compared with 4G. Verizon’s 5G mobility service offers an unparalleled experience that impacts industries as diverse as public safety, health care, retail and sports. The company’s 5G network hinges on three fundamental drivers to deliver the full potential of next-generation wireless technology. These include massive spectrum holdings, particularly in the millimeter-wave bands for faster data transfer, end-to-end deep fiber resources and the ability to deploy a large number of small cells.

All these positives and sound financial management probably led to the quarterly dividend hike.

Shares of the company have gained 3.5% in the past year compared with the industry’s rally of 6.4%.



Verizon presently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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