The Company Stock Description:
Born from the merger between Bell Atlantic Corporation and GTE Corporation on June 30, 2000, Verizon (VZ) provides communication services in the United States and globally. They have separated their activities into 2 segments: wireline & wireless. We find the “usual” activities of a telecommunications giant such as cable, internet, phone services, etc. With the acquisition of Alltel Wireless in 2009, Verizon surpassed AT&T (read T stock analysis) for the title of the largest wireless carrier. Strong from its deal with Apple (AAPL), VZ has become the flavour of the month on the stock market.
The Company Ratios and Financial Info:
- Current Dividend Yield 5.03%
- 5 year Dividend Growth 3.64%
- 1 year Dividend Growth 2.79%
Company Metrics :
- Sales Growth: -1.15%
- Sales Growth (5 years): 4.99%
- Earnings Growth: 30.19%
- P/E Ratio: 17.28
- Payout Ratio: 213.72%
- Return on Equity: 6.38
- Debt to Capital Ratio: 0.52
- Ticker: VZ (NYSE)
- Price: $37.84
- Trend (technical analysis): up trend (YTD)
Upcoming opportunities and dangers:
Verizon made a great move from a strategic point of view by being a provider for both iPhone and Android (GOOG). This gives them great positioning in the mobile industry. The number of subscribers is growing and VZ is recognized as a strict cost controller.
As for potential dangers, I would think that while Verizon is focusing on beating up AT&T, it might underestimate local wireless provider competition. This is a field with rapid evolution and such a behemoth might not be fast enough to react.
I like the dividend yield and I like the active management which was able to get a contract for the iPhone. However, I don’t like the dividend payout ratio and the fact that VZ has been the flavour of the month in 2011. I think it is a good dividend stock, but I am not sure it the timing is right (over the short term) to buy it. Overall, if you are looking for a long term investment VZ is definitely a good pick.
Disclaimer: I do not hold position on Verizon