Verizon: How Would Higher Dividend Growth Impact Financials And Valuation?
- Verizon has ample capacity to continue supporting its current annual dividend per share growth at ~3%.
- Even with a 7% annual dividend per share growth over the next few years, Verizon can still repay a significant amount of debt and maintain a steady and reasonable earnings payout ratio.
- Current stock valuation implies 3% perpetual dividend per share growth rate.
- The stock has about 16% upside based on a 2-stage dividend discount model that incorporates the 7% dividend growth scenario in the first few years.