Verizon Dividend Yields Nearly 5% (VZ)
By: Ned Piplovic,
Verizon Communications, Inc. (NYSE:VZ) suffered some asset depreciation since the end of January 2018 along with the overall market sell-off but the dip in the stock’s share price pushed the current dividend yield 9% higher to nearly 5%.
The company’s current yield is significantly higher than the average yield of the entire Technology sector and is also above the simple average yield of all the companies in the Telecom segment. Verizon’s share price experienced a few trend swings of more than 10% over the past 12 months but currently stands within 5% of its mid-March 2017 level.
The company set its next ex-dividend date for April 9, 2018, and will distribute its next dividend just a few weeks later on its May 1, 2018 pay date.
Verizon Communications, Inc. (NYSE:VZ)
Founded in 1983 and headquartered in New York City, Verizon Communications Inc. provides communications, information and entertainment products and services. The company offers wireless voice and data services, internet access on various smart and basic phones, notebook computers and tablets. Additionally, Verizon offers Internet of Things (IoT) services that support devices used in fleet management and telematics, energy and agricultural technology, as well as smart community markets and wireless devices. The company’s Wireline segment offers high-speed Internet, Fios Internet, Fios video services and Voice over Internet Protocol (VoIP) telephone service. As of November 2017, 98% of U.S. population had coverage of Verizon’s 4G LTE network.
Additionally, Verizon is developing the next generation network and will launch its first 5G network in Sacramento, California, in the second half of 2018. The 5G network technology provides connection speeds that are 30 to 50 times faster than the current 4G technology. Formerly known as Bell Atlantic Corporation, the company changed its name to Verizon Communications Inc. in June 2000.
The company experienced moderate volatility over the past year and went through few up-and-down swings of 10% or more. The share price declined almost 15% from $50.24 on March 20, 2017, to its 52-week low of $42.89 on July 11, 2017. Following a 16% surge over the subsequent 90 days, the share price gave up almost all those gains and dropped to within 3% of the July low by mid-November. After another trend reversal, the share price ascended 24% towards its 52-week high of $54.72 on January 26, 2018.
Unfortunately, following lower unemployment and rising wages reports, as well as concerns that the Federal Reserve will increase interest rates more than initially anticipated, financial markets declined, and the Verizon share price followed. By the end of February, the share price fell to 5% below its level on March 20, 2017. Since the beginning of March 2018, the share price showed some upward movements, but no steady momentum yet. The share price closed on March 19, 2018, at $48.31, which was 3.8% short of its level from one year earlier and 11.7% below the peak from the end of January. However, the share price was 12.6% higher than the 52-week low from July 2017.
While Verizon’s share price struggled over the past year, the company’s dividend continued to pay reliable income that has been rising for more than a decade. The company’s current $0.59 quarterly dividend distribution is 2.2% higher than it was in the same period of the previous year. The annualized dividend distribution of $2.36 for 2018 yields 4.9% and is 8.6% above the company’s own 4.5% average yield over the past five years.
Additionally, the company’s current yield is almost three times higher than the 1.23% average yield of all the companies in the Technology sector and nearly 60% above the 3.08% simple average yield of Verizon’s peers in the Telecommunications market segment.
The company started distributing dividends to its shareholders in 1984 and has raised its annual dividend payout for the past 14 consecutive years. Over the past two decades, the company paid a flat $1.54 annual dividend for the first six years and then boosted its annual dividend payout every year after that at an average growth rate of 3.1% per year.
While the share price still trails behind its price level from one year earlier, the dividend income made up the difference and the shareholders remained in the green with a total return of nearly 3% over the one-year period. Over the past three and five years, the total returns were 13.7% and 25.5%, respectively.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.