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Verizon: A Golden Dividend Growth Opportunity Reveals Itself
- Verizon shares have plummeted over 11% in the past month.
- This has driven the yield on the shares up significantly in short order.
- Verizon appears to be in the right place at the right time. The company is making all the right moves to create value for investors.
- The company is focused on return of capital to shareholders with a robust dividend. Verizon appears to be an excellent dividend growth opportunity presently.
Verizon Vs. Vodafone: One Company Hit A Home Run With Last Year's Wireless Deal
- What did investors think after the Wireless deal was announced versus what we know today?
- How has the market for Verizon's Wireless market changed over the last year?
- How has Vodafone spent the money?
- Right now, which has come out on top, and is the better investment opportunity?
- VZ fell 4% on Tuesday and another 1.6% on Wednesday as investors worried about the Q4 update.
- Seasonal customer phone upgrades are the primary reason for the margin decline and are transitory in nature.
- With their smaller scale, TMUS and S will likely not be able to consistently win business from VZ thanks to its leading network.
- At less than 13x forward earnings and with a nice dividend yield, investors should be buy on this weakness.
- The reasons I've held VZ shares this long no longer apply.
- Three actions on behalf of management could have a negative long-term effect.
- VZ's recent warning serves as proof that pricing pressure is a bigger deal than many VZ investors considered.
Verizon: Does Current Price War Mean Long-Term Damage?
- Verizon expects Q4 margins to come under continued pressure, continuing trends seen in Q3.
- Sprint and T-Mobile are unlikely to be able to continue aggressive discounting indefinitely without causing irreparable damage to their respective businesses.
- I recently purchased Verizon, and am comfortable steadily accumulating Verizon for my dividend accumulation portfolio.
- Verizon confirms that a competitive domestic wireless market is pressuring margins.
- Sprint only recently directly attacked Verizon customers suggesting the pressures are not short-term in nature.
- Verizon is no longer cheap based on a large debt load.
- Verizon warned on Monday that EBITDA will be pressured, thanks to higher retail postpaid disconnects and a highly competitive wireless environment.
- Yet, nothing has really changed within the industry with AT&T or TMUS.
- Therefore, has Sprint done something that may be causing Verizon problems?
- Verizon Wireless has not reduced its dividend payments in 30 years.
- The company is the leader in wireless with a market share of 34%.
- Verizon's solid dividend yield and future growth prospects make it a compelling investment for exposure to US telecommunications.
- Is Verizon overvalued, undervalued or fairly valued?
Why Dividend Growth Investors Should Buy Verizon Instead Of AT&T Or Sprint
- AT&T has a higher dividend yield than Verizon, but weaker earnings growth and lower dividend growth.
- Sprint's inconsistent profitability and no dividend make it too speculative to buy.
- Verizon offers the best mix of revenue and earnings growth, along with a high dividend yield and solid dividend growth. This makes it the best pick of the three.
Verizon Powers Forward After Delivering Strong Third Quarter Results
- Third quarter results show solid growth in wireless segment and FiOS.
- VZ has ability to add new subscribers with rising ARPA and maintain lower churn in competitive environment.
- Company eager to participate in upcoming spectrum auction.
Verizon Posts Solid Third Quarter Results As Competition Continues To Toughen
- Verizon’s third quarter highlights reported total revenue of $31.6 billion, growing by 4.3% year on year and by 0.3% sequentially. Net income increased 68.2% over the third quarter of 2013.
- Earnings per share were reported at 89 cents and grew by 15.6% relative to last year.
- Margins for the company eroded as price competition stiffened in the market. Further margin erosion is expected in the future as competition is showing signs of heating up.
- Share prices have remained relatively stable over the course of the past six months. The yearly range for share prices was reported at $45.45-$53.66.
- The price target for shares is of $53.71. The company offers high dividend yield of 4.5%, and trades at a P/E ratio of 10.54.
Solid Growth Rate And Rewarding Shareholders Key Features Of Verizon
- Company keeps translating operational success into cash flow growth.
- VZ’s capital allocation strategy being focused on sharing success with shareholders through dividend payments remains secure.
- Company offers attractive dividend yield of 4.5%.
Is High-Yielding Verizon Worth A Position In Your Portfolio Right Now?
- The dividend is pretty large and is only at a 47% payout ratio of trailing twelve month earnings.
- I calculate a bit more reward than risk at these current levels.
- The one thing I don't like is that 2015 earnings are expected to be less than the trailing twelve month earnings.
Update: Impressive Growth In Key Metrics Shows Verizon Is One Of The Best Picks In The Sector
- The company announced its third quarter earnings.
- Verizon recorded impressive growth in key metrics.
- We maintain that Verizon is one of the best picks in the sector.
- Most Q3 wireless metrics were disappointing as Verizon started to react to Sprint’s aggressive pricing initiatives.
- Pressure is mounting on Verizon in the seasonally-strong Q4 as Sprint rolls out a compelling iPhone 6 leasing plan.
- We remain convinced that Verizon will have to implement 5% to 10% price cuts in the next 12-24 months, with a -4% to -8% impact on EBITDA.
Verizon Communications: Soft Quarter, But Dividend Appeal Remains
- Verizon Communications posts a somewhat weaker third quarter earnings report.
- This results from intensifying competition in the wireless segment.
- Given this development and the leveraged balance sheet, I remain cautious, although dividend investors will probably find shelter in the shares.
- The company’s wireless business revenue has increased by 6.8 percent in 2013 compared to 2012.
- Instead of subscriber growth, revenue gains are expected from higher spending by existing subscribers.
- Average monthly spending per subscriber is estimated to increase to $59.75 by 2017.
- Price target of the company is expected to increase by 15 percent by the end of next year.
Update: Verizon 'Slightly Disappoints' With Third Quarter Earnings
- VZ earned $0.89/share, missing reduced estimates by $0.01; wireless margins dropped.
- Results were a little worse than expected, especially since EPS estimates were reduced $0.04 in last 60 days.
- I continue to believe VZ is superior telecom investment due to high margins and lower risk profile.
Tue, Oct. 21, 9:37 AM
- Verizon (VZ -0.8%) had 1.52M wireless retail postpaid net adds in Q3, up from 941K a year ago and indicating further share gains in spite of tough price competition; the total base is at 100.1M. Retail prepaid net adds totaled just 9K; the base is at 6.1M.
- Price competition is affecting wireless service revenue growth: Though still better than AT&T/Sprint's, growth slowed to 4.8% from 5.9% in Q2 and 7.5% in Q1. Meanwhile, Edge smartphone upgrade plan adoption contributed to a 28.9% increase in equipment revenue, which in turn contributed to a 190 bps drop in wireless op. margin to 31.9%.
- Retail postpaid churn rose slightly to 1.00% from 0.94% in Q2 and 0.97% a year ago. Retail postpaid ARPA +1% Q/Q and +3.5% Y/Y to $161.24.
- Smartphone users made up 77% of the retail postpaid base at the end of Q3, up from 75% at the end of Q2. Postpaid smartphone sales rose 21% Y/Y.
- Wireline revenue (30% of total revenue) fell 0.8%. Consumer retail revenue +4.5% thanks to FiOS growth and strategic services +1% due to data growth, but small business -4.1% and core -11.7% due to voice declines. Wireline op. margin rose to 2.3% from 1.5% a year ago.
- 114K FiOS video and 162K FiOS Internet subs were added; those figures are up from Q2 levels, but down from year-ago levels. Verizon now has 5.5M FiOS video and 6.5M FiOS Internet subs. Wireline voice connections fell 6.4% Y/Y to 20.1M.
- Verizon still expects 4% 2014 revenue growth; consensus is at 4.6%. Capex guidance has been narrowed to $17B from $16.5B-$17B.
- Q3 results, PR
Tue, Oct. 21, 7:33 AM
Mon, Oct. 20, 5:30 PM
Thu, Oct. 16, 7:11 PM
- Verizon (NYSE:VZ) has lengthened the amount of time needed to pay off a phone obtained through its Edge smartphone upgrade program from 20 months to 24, and is now requiring users to pay off 75% of their current phone's price before being eligible to upgrade (up from 60%).
- The net effect: Monthly payments will be lower, but users will only be able to upgrade phones every 18 months vs. 12 previously.
- Big Red is also increasing the service plan discount given to Edge subs on 500MB-8GB plans by $5/line to $15/line. Those on bigger data plans will still get a $25/line discount.
- Many of the early reactions have been critical. Engadget: "The big problem is simply that this now sounds more like a conventional contract rather than the fast track you were probably expecting." DSLReports thinks Edge is now "slightly worse" than before.
- However, Jefferies notes the changes will boost Verizon's EBITDA (since more of a phone's price has to be paid off), and that its monthly fees are now closer to those paid by users of AT&T's popular Next upgrade plans.
- Overall, the shakeup drives home Verizon's commitment to a premium pricing strategy in the face of never-ending price cuts and aggressive promos from T-Mobile and Sprint, many of which AT&T has responded to.
- Verizon has weathered the storm fairly well to date. Q3 results arrive on Oct. 21.
Fri, Oct. 10, 8:23 AM
- Scooping up Verizon's (NYSE:VZ) tower portfolio could position American Tower as (NYSE:AMT) the new leader in the U.S. tower market, Citigroup says in a note.
- A purchase would help AMT's scale and increase its exposure to VZ as an anchor tenant.
- Related: Bloomberg: Verizon looking to sell towers, could net $6B
Thu, Oct. 9, 6:57 PM
- GE "machines and devices" addressing markets such as rail, aviation, energy, and healthcare will support Verizon's (NYSE:VZ) machine-to-machine (M2M) connectivity services, as well as Verizon's cloud services.
- The companies declare the tie-up will allow them to deliver plenty of value-added services" for GE's Predix software platform for connecting and managing industrial device, including "remote monitoring, diagnostics and the ability to resolve maintenance issues" Verizon and GE will also work to create a global SIM for the connected hardware.
- Like AT&T, Verizon has been busy rolling out services providing mobile connectivity for embedded devices, hoping they can provide a top-line boost as standard mobile service revenue growth slows. Big Red's embedded offerings include services for cars and smart grids.
- M2M module vendors Sierra Wireless (NASDAQ:SWIR) and Novatel (NASDAQ:NVTL) must be pleased to see the partnership. Both companies count Verizon as a client.
- Previous: GE says data business headed for $4B-$5B in sales by 2017
Mon, Oct. 6, 3:32 PM
- Cable industry analyst Craig Moffett thinks the cable/broadband industry is well-positioned to benefit from the gradual consumer shift to WiFi-first services.
- The pieces are falling together for the group as smartphone users increasingly use WiFi connections for data and voice - instead of relying on cellular networks.
- In another two to three years after technology hurdles are cleared, cable WiFi could be the standard, says Moffett.
- Related stocks: TWC, CMCSA, CHTR, CVC, VZ, T
Sat, Oct. 4, 5:14 PM
- Redbox Instant, a streaming video service operated by Verizon Communications (NYSE:VZ) and Outerwall's (NASDAQ:OUTR) Redbox, will shut down next week because the venture has not been as successful as hoped.
- The JV launched in March 2013, and was viewed as a potential rival to Netflix (NASDAQ:NFLX). The service provided subscribers with access to a streaming library, plus the option to obtain credits toward DVD/Blu-ray discs that are available at Redbox kiosks. Customers could also rent or buy titles electronically from a separate library, with rentals starting at $3 for 48 hours, and purchases starting at $9.
- Redbox Instant by Verizon has not disclosed subscriber figures.
- Rumors about a shutdown first surfaced about a week ago; the service had disabled new sign-ups for three months due to a credit card fraud issue.
Thu, Oct. 2, 2:42 AM
- The FCC is prepping its upcoming auction of frequencies known as AWS-3, scheduled to begin on Nov. 13. The auction is expected to raise at least $10B and will include airwaves previously occupied by multiple federal users.
- A total of 80 entities submitted initial applications, including Dish Network (NASDAQ:DISH) and three of the four largest U.S. wireless carriers - Verizon (NYSE:VZ), AT&T (NYSE:T) and T-Mobile (NYSE:TMUS).
- Sprint (NYSE:S) is planning sit out on the auction to save firepower for a major sale of low-frequency airwaves scheduled for next year.
Tue, Sep. 30, 9:19 AM
- The FCC is considering new regulations for companies looking to offer an over-the-top online video service, according to The Wall Street Journal.
- Rules governing OTT services could make it harder for content providers and distributors to carve out smaller deals for programming.
- Traditional streamers such as Netflix (NASDAQ:NFLX), Hulu (DIS, CMCSA, FOXA), and Amazon (NASDAQ:AMZN) that offer their content on-demand should be outside the regulatory purview of the FCC on the OTT startups.
- Dish Network (NASDAQ:DISH), Sony (NYSE:SNE), and Verizon (NYSE:VZ) are the furthest along in the race for a trimmed-down online video package aimed largely at cord-cutters and cord-nevers.
Wed, Sep. 24, 12:51 PM
- A majority of respondents in a poll conducted by Reuters think NFL sponsors should sever ties with the league due to the handling of star players accused of domestic abuse.
- It's not a simple call for the consumer-facing companies with ratings for NFL games seemingly unaffected by the issue.
- Though major sponsors such as PepsiCo (NYSE:PEP), Verizon (NYSE:VZ), Anheuser-Busch InBev (NYSE:BUD) have maintained advertising campaigns, Procter & Gamble (NYSE:PG) canceled a Crest promotion and other advertisers have reportedly asked for shifts away from airing ads during times in the coverage when the controversy is being analyzed.
- NBC (NASDAQ:CMCSA) has the TV rights to the Super Bowl this season and will hope that demand and pricing for the highly-priced spots before, during, and after the game aren't impacted.
Tue, Sep. 23, 6:13 PM
- Verizon (NYSE:VZ) has hired boutique i-bank TAP Advisors to find a buyer and work out a lease-back agreement for its 12K wireless towers by year's end, Bloomberg reports. It adds a deal could yield $6B, given how much AT&T received per tower in last year's $4.83B sale/leasing deal with Crown Castle (NYSE:CCI).
- Crown Castle, American Tower (NYSE:AMT), and SBA (NASDAQ:SBAC) have all been buying towers at a heady pace. However, the rising debt loads produced by the purchases could make one or more of the companies respond cautiously to Verizon's move.
- Verizon, for its part, is looking to de-leverage some after raising over $60B in debt to help pay for the Vodafone deal. The carrier had $104.2B in net debt at the end of Q2.
Tue, Sep. 16, 4:01 PM
- Anheuser-Busch InBev (NYSE:BUD) comes out with the sternest words to date of any of the major NFL sponsors.
- The global brewer says it's not satisfied with the manner the league has handled the recent incidents involving star players.
- Earlier statements from big sponsors FedEx (NYSE:FDX), Verizon (NYSE:VZ), and PepsiCo (NYSE:PEP) were more on the supportive side.
- Procter & Gamble (NYSE:PG) has been relatively quiet, although its CoverGirl Get Your Game Face On campaign was used by protesters to make a strong point.
- In one of the stronger corporate statements on the NFL developments, the Radisson hotel chain broke off its sponsorship deal with the Minnesota Vikings.
Fri, Sep. 12, 10:14 AM
- Apple's (AAPL +0.1%) iPhone 6 Plus is now on backorder and not available to ship for 3-4 weeks in the U.S., judging by Apple.com shipment quotes after the device went on sale after midnight.
- The iPhone 6 Plus, the larger of the two iPhone 6 models offered, is showing a shipment time of 3-4 weeks rather than delivery on the first day of sale, Sept. 19th, for the iPhone 6.
- Also, BGR reports that iPhone 6 Plus units through AT&T (T -0.4%) will now ship in 21-28 business days, Verizon's (VZ -0.6%) models are backordered until Oct. 7 (for 64 GB) or Oct. 14 (16 GB and 128 GB), and Sprint (S +7.3%) says all of its shipments are currently delayed.
- Worldwide demand also is said to be high for the Plus, with customers in France and the U.K. saying the larger iPhone has sold out.
- AAPL is expected to announce next weekend the total initial sales results for the first three days of availability.
Fri, Sep. 12, 1:55 AM
- Verizon (NYSE:VZ) may introduce an over the Internet digital video service by the middle of next year, says chief executive Lowell McAdam.
- The new service would be similar to Netflix, Amazon and Hulu but would also stream live channels via a technology called multicasting. The technology avoids clogging the network, delivering content straight from broadcasters to smartphones over a single stream of airwaves that users can "tune" into.
Thu, Sep. 11, 7:08 PM
- After moving back above the $100/share level, Apple (NASDAQ:AAPL) is back over the $600B mark in market cap, pushing it nearly $200B above Exxon Mobil (NYSE:XOM), the next largest company in the U.S.
- XOM is still valued at more than $400B, but Google (NASDAQ:GOOG) at $397B and Microsoft (NASDAQ:MSFT) - which has surged in 2014, adding $74B in market cap to $386B - are closing the gap.
- Berkshire Hathaway (NYSE:BRK.B) completes the top five with a $339B market cap; no other companies are worth more than $300B.
- Rounding out the top 20 market caps: JNJ, WFC, GE, WMT, CVX, PG, JPM, FB, VZ, IBM, PFE, KO, ORCL, T, MRK.
VZ vs. ETF Alternatives
Verizon Communications Inc. is a provider of communications, information and entertainment products and services to consumers, businesses and governmental agencies. Its two segments are Wireless and Wireline.
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