Verizon has now completed major upgrades to its wireless networks. Those upgrades should help it attract new users. As well, the lower capital spending bodes well for dividend increases.
The shares are also attractively priced as the stock trades at just 8.8 times the company’s 2024 earnings forecast.
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VERIZON COMMUNICATIONS INC. (New York symbol VZ; www.verizon.com) is the second-largest wireless carrier in the U.S. after AT&T, with 144.8 million subscribers (consumers and businesses) as of March 31, 2024. It also sells traditional telephone lines, high-speed Internet and TV services.
Verizon last raised its quarterly dividend in November 2023 to $0.6650 a share, up 2.0% from $0.6525. The annual rate of $2.66 a share yields a high 6.6%. The company has now raised the dividend rate for 17 consecutive years.
Dividend Stocks: Rising cash flow should pay down debt and secure the payout for Verizon
Revenue in the quarter ended March 31, 2024, rose 0.2%, to $32.98 billion from $32.91 billion a year earlier. Higher prices, offset by weaker phone sales, contributed to the increase. Excluding one-time items, per-share earnings declined 4.2%, to $1.15 from $1.20, on higher interest and operating costs.
The company’s free cash flow (regular cash flow less capital expenditures) rose 16.2% in the latest quarter to $2.71 billion. That will let it keep paying down its long-term debt of $136.1 billion as of March 31, 2024 (equal to 80% of its market cap). It also held cash of $2.37 billion.
Verizon now plans to spend between $17.0 billion and $17.5 billion on its new 5G networks and other upgrades in 2024. That’s down from $18.8 billion in 2023 and $23.1 billion in 2022. That lower capital spending will let Verizon keep raising your dividend.
Shareholders can expect Verizon to earn $4.58 a share for all of 2024, and the stock trades at an attractive 8.8 times that forecast.
Recommendation in Wall Street Stock Forecaster: Verizon Communications Inc. is a buy.
