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- 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.
- Verizon's recent boom in subscribers indicates high levels of trust in company's products.
- IPhone sales will drive successful numbers potentially well into the 4th quarter.
- Financials all indicate at least marginal rise across the board, and historically will be see a slight boost in the near future.
- We have seen strong ratings for Verizon and believes it is the clear leader in the Telecom sector for investors.
- Investment rationale includes dividend yield, attractive entry and valuation, strong management and expected earnings growth.
- 3Q announcement of earnings should be positive for Verizon.
The Biggest Benefit Of Verizon And AT&T May Be Low Volatility
- Verizon and AT&T have dominant market positions and favorable economics, which underpin sizable dividend returns from each company.
- High-yielding stocks occasionally get overlooked in periods of strong stock price appreciation, but come back into favor in slower-moving markets.
- High-yield stocks confer a number of advantages to an investor, including large cash returns and the ability to accelerate income through reinvestment.
- Both AT&T and Verizon have favorable economics, which could make them strong candidates for investors, particularly if we move into a period of high volatility and low price appreciation.
High-ROE, Low-PE Investing - As It Applies To AT&T And Verizon Communications Inc.
- High-ROE, low-P/E investing is simple to understand and implement.
- You harness the power of compounding, as well as the discipline of not overpaying for equity.
- AT&T and Verizon both meet this criterion.
Verizon Communications Inc. Is Focused On Generating Cash And Lowering Debt
- Verizon Communications Inc. is the largest U.S. wireless carrier. Verizon also offers wireline and broadband services primarily in the northeastern U.S.
- The company's focus is on lowering the debt level resulting from the $130 billion buyout of Vodafone Group plc’s 45% interest in Verizon Wireless.
- Following in AT&T's and T-Mobile's footsteps, VZ is exploring the potential benefits of divesting its cell towers.
Verizon Trumps AT&T On Margin, Growth And Lower Risk
- AT&T's 5.4% dividend gets all the headlines.
- Verizon should be appreciated for its superior margins and growth, lower risk and management acumen.
- AT&T's DirecTV deal poses risk that Verizon avoids.
- Both companies are strong, but Verizon offers more appreciation potential and is less prone to churn than its rival.
Thu, Apr. 24, 7:31 AM| Comment!
Tue, Apr. 22, 9:14 AM
- Verizon's (VZ) Federal Network Systems (FNS) unit is being sold to Jacobs Engineering (JEC) for an undisclosed sum. The deal is expected to close this summer. (PR)
- FNS has over 750 employees, and provides IT, network design/maintenance, data security and systems integration services. It's focused on servicing intelligence, DoD, and federal civilian clients.
Thu, Apr. 10, 2:22 PM
- T-Mobile USA's (TMUS -2.6%) Operation Tablet Freedom allows customers to add tablets to their postpaid plans for free. By contrast, AT&T's (T +1.1%) Mobile Share plans and Verizon's (VZ -0.4%) More Everything plans charge $10/month for each tablet that's added to an existing data bucket.
- T-Mobile is also providing customers who "bring, buy, or trade in a tablet" nearly 1.2GB/month of free data for the rest of 2014 - it'll charge $10/month for the data afterwards - and discounting 4G-capable tablets so as to price them on par with Wi-Fi-only models. A 4G 16GB iPad Air will go for $499 rather than its MSRP of $629.
- Yesterday, T-Mobile unveiled its $40/month Simple Starter plan, which provides unlimited voice/text to go with a meager 200MB of data (albeit with no overages). A third pricing announcement is due tomorrow.
- Past T-Mobile price cuts/promotions: I, II, III
Mon, Apr. 7, 11:52 AM
- Verizon (VZ -0.3%) is paying $194M in cash to acquire spectrum licenses from Cincinnati Bell (CBB +1%), and is also assuming tower lease obligations. The deal, expected to close in 2H14, has a total value of $210M to CBB.
- CBB plans to wind down its wireless ops and "assist its wireless customers in transitioning their service arrangements to Verizon Wireless or other wireless providers."
- Verizon, perhaps looking to appease regulators, will assign the rights to CBB's spectrum to P-E firm Grain Management, and then lease a portion of it back.
- FierceWireless observes CBB owns a mixture of high-frequency and low-frequency Ohio spectrum. Regulators have been nervous about attempts by Verizon and AT&T to increase their already-massive low-frequency holdings.
Wed, Mar. 19, 11:25 AM
- The pay-TV industry in the U.S. posted its first-ever decline in video subscribers during 2013, according to data compiled by SNL Kagan.
- The group (TWC, CVC, CHTR, DTV, DISH, VZ, T) lost 251K subscribers during the period.
- Even a late charge in Q4 by Comcast CMCSA couldn't turn the tide.
- What to watch: Online TV services which offer limited programming packages are expected to start cropping up this year to put additional pressure on pay-TV operators. Companies such as Dish Network plan to walk a tightrope of enticing cord-cutters and cord-nevers to sign on without cannibalizing current video subscriber counts.
Tue, Mar. 11, 10:47 AM
- Ahead of a big speech at the U.S. Chamber of Commerce, SoftBank's (SFTBF, SFTBY) Masayoshi Son is promising a "massive price war" if skeptical regulators allow Sprint (S +0.7%) to merge with T-Mobile USA (TMUS +2.4%).
- As expected, Son also insists Sprint and T-Mobile, who between them have a giant portfolio of high-frequency spectrum assets, could act as a credible last-mile broadband rival to phone/cable duopolies if they joined forces.
- AT&T (T -0.8%) and Verizon (VZ -0.6%) are ticking lower, while Sprint and T-Mobile are up moderately. AT&T has already been cutting prices to counter T-Mobile's aggressive moves - moves that have contributed to FCC/DOJ doubts about the merits of a Sprint/T-Mobile deal.
- Verizon, for now, is refusing to take part in a price war, and betting its service quality and unmatched 4G coverage will lead its pospaid subs to continue paying a premium.
- Yesterday: U.S. mobile roundup
Mon, Mar. 10, 2:54 PM
- AT&T (T -0.3%), which unflinchingly stuck with a premium pricing strategy for years, has announced yet another price cut for its Mobile Share plans (previous), as it tries to fend off a share-gaining Verizon and a resurgent T-Mobile.
- The price of Ma Bell's low-end 2GB Mobile Share plan has been cut by $15/month. The base price for a single user is now $40/month; adding a smartphone via AT&T's Next upgrade plan adds $25/month to the bill. Opting for a traditional phone subsidy/contract instead of Next costs $40/month.
- T-Mobile (TMUS +0.3%) , meanwhile, has simultaneously increased its data allotments for cheaper postpaid plans - a $50/month plan featuring unlimited voice/text now provides 1GB of data, up from 500MB - and hiked the price of its unlimited data offering by $10 to $80/month.
- Verizon (VZ -0.5%), which has offered some minor price cuts and promotions lately, insists it won't depart from its premium pricing strategy. CFO Fran Shammo: "We’re not going to buy customers ... You have to earn customers." Shammo also reiterates Verizon's support for subsidies (and with them, service contracts), and says the carrier will take a cautious approach to installment plans.
- Bloomberg reports SoftBank's (SFTBF, SFTBY) Masayoshi Son, facing regulatory opposition to his plans for a Sprint (S +0.4%) bid for T-Mobile, will shift from arguing a merger is needed combat Verizon/AT&T to arguing a deal will allow Sprint/T-Mobile to act as a last-mile broadband alternative to phone/cable duopolies. Son is due to make a speech tomorrow.
Fri, Mar. 7, 5:30 PM
- Verizon (VZ) has signed off on a buyback program good for repurchasing up to 100M shares through Feb. 28, 2017. The program, arriving two weeks after the Vodafone/Verizon Wireless deal officially closed, is in theory good for repurchasing nearly 2.5% of outstanding shares.
- However, CFO Fran Shammo stated last month he doesn't expect Verizon to buy back any shares for at least 2-3 years, as it works to pay off the $60B+ in debt it took on to help finance the Vodafone deal.
- Verizon has largely refrained from buybacks in recent years, keeping its options open as it made giant Verizon Wireless dividend payments to Vodafone. The carrier repurchased only 3.5M shares through a 100M-share, three-year program that expired last month.
Fri, Mar. 7, 4:36 PM| 1 Comment
Tue, Mar. 4, 6:38 PM
- Verizon (VZ) CEO Lowell McAdam says he has personally talked with CEOs of major content providers about offering FiOS video content nationwide, and over both broadband and mobile networks.
- The comments come six weeks after Verizon struck a deal to buy the assets of Intel's stillborn Web TV unit, and shortly after Dish reached a deal with Disney that gives it the right to offer Disney channels as part of a separate streaming service.
- There were reports at the time of the Intel deal that Verizon wanted to use the assets to offer online TV services in areas not covered by FiOS.
- Intel's efforts were thwarted by stalled licensing talks and the opposition of incumbent pay-TV providers such as Time Warner Cable. Verizon, already a major client of media giants (via FiOS), might have more leverage.
- If Verizon's effort gets off the ground, it could benefit Synacor (SYNC), whose software powers FiOS' existing TV Everywhere services.
Mon, Mar. 3, 5:57 PM
- Via its new AllSet prepaid plans, Verizon (VZ) is offering unlimited voice/text and 500MB of data to prepaid smartphone users for $45/month. Users can obtain an extra 500MB for $5, 1GB for $10, and 2GB for $20. Feature phone users only pay $35/month, but their voice minutes are capped at $500.
- Previously, Verizon offered unlimited voice/text and 2GB of data to smartphone users for $60/month, with an extra 2GB available for $10. Thus the carrier's new plans amount to a price cut for light data users, but not for heavier ones.
- Verizon is looking to better compete against T-Mobile USA (TMUS), which added 112K branded prepaid subs in Q4 and is expanding the reach of its MetroPCS brand. AT&T, on the verge of acquiring Leap Wireless and its Cricket prepaid brand, has also been fighting over a prepaid market that's responsible for much of the U.S. mobile industry's remaining growth.
Thu, Feb. 27, 1:19 PM
- Morgan Stanley has resumed coverage on Verizon (VZ +2.8%) with an Overweight and $52 PT, and JPMorgan has added the carrier to its Focus List two days after resuming coverage with an Overweight and $57 PT.
- MS' Simon Flannery calls Verizon's valuation "attractive," and likes its mobile competitive positioning. He suggests shares have been pressured by the impact of Vodafone's 1.27B-share distribution following the closing of the Verizon Wireless deal.
Wed, Feb. 26, 4:13 AM
- Twenty-six out of 288 profitable Fortune 500 companies paid no federal income tax between 2008 and 2012, a report from the left-leaning activist group Citizens for Tax Justice shows.
- The firms include Boeing (BA), GE (GE), and Verizon Communications (VZ).
- The study adds that 111 firms paid no federal income tax in at least one of the five years.
- However, GE and other companies named dispute the report's findings. "For each year cited by Citizens for Tax Justice, GE paid income taxes in the U.S., as well as billions in other state, local and federal taxes in the U.S.," GE said.
- Boeing said its total effective 2013 tax rate was 26.4%, while Verizon said it paid over $2.9B in income taxes from 2008-2012.
- CTJ's report comes as GOP House member David Camp gets set to introduce an overhaul of the tax code.
Mon, Feb. 24, 6:41 PM
- Verizon (VZ) and AT&T (T) have confirmed that they, too, are talking with Netflix (NFLX +3.4%) about direct peering deals. Verizon CEO Lowell McAdam says his company's talks with the streaming giant have been going on for about a year.
- Netflix shares closed the day with strong gains, as analysts argued direct peering deals such as the one just reached with Comcast could end up having a neutral or even positive impact on Netflix's bandwidth costs, given the company will no longer have to pay intermediaries such as Cogent (CCOI -6.8%).
- Dan Rayburn: "It should actually be cheaper for Netflix to buy direct from Comcast, and they also get an SLA, which also improves quality ... While I don’t know the price Comcast is charging Netflix, I can guarantee you it’s at the fair market price for transit."
- Others aren't convinced direct peering deals are a positive. The Washington Post: "Cogent has many competitors. Verizon's FiOS service does not. If companies like Cogent are squeezed out of business, it will make these already powerful network owners even more powerful."
- GigaOm: "These agreements aren’t transparent ... rates could go up over time, and they essentially act as a tax on the Internet."
Sun, Feb. 23, 8:53 PM
- In what could be a landmark pact for its dealings with other broadband providers, Netflix (NFLX) agrees to pay Comcast (CMCSA) to ensure its shows stream smoothly to the cable operators' customers.
- The debate: Who should bear the cost of upgrading Internet networks to carry the growing volume of online video - broadband providers (like Comcast) or content companies (like Netflix). While some big content names have begun paying the providers for faster and smoother access, Netflix - until now - has been a holdout, and today's agreement likely paves the way for similar deals with major broadband companies like Verizon (VZ), AT&T (T), and Time Warner (TWC).
- The agreement, of course, comes just days after Comcast agreed to buy TIme Warner in a deal which would make it by far the largest provider of broadband in the U.S., and it removes one potential regulatory issue hanging over the acquisition.
- Press release
- From Friday: Signs point to a Netflix/Comcast deal
Fri, Feb. 21, 11:20 AM
- Verizon (VZ -0.3%) has officially completed its $130B purchase of Vodafone's (VOD +0.5%) 45% stake in Verizon Wireless. As previously announced, Verizon is issuing 1.27B shares to Vodafone (current value of $61B), and paying for the rest of the deal in cash.
- Vodafone says it will return $23.9B of the cash to shareholders in addition to distributing the Verizon shares (previous), leading to a total return of $85B. All signs suggest the carrier will use a chunk of the remaining post-tax windfall to go acquisition-hunting.
- Verizon reiterates the deal will immediately be accretive to EPS by 10%. Over the long haul, it's expected to give Verizon more flexibility to integrate its wireline and mobile services, and to cut overhead by combining redundant divisions.
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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