Entering text into the input field will update the search result below

Once In A Generation Dividend Hike Coming From Verizon

Aug. 06, 2018 8:59 AM ETVerizon Communications Inc. (VZ)T, TMUS90 Comments
Dividend Appreciator profile picture
Dividend Appreciator


  • Verizon has hiked its dividend 11 years in a row.
  • It offers a juicy yield, though at a modest growth rate so far.
  • A solid business combined with tax cuts will drive dividend growth this year.

Every once in a generation or so, Uncle Sam decides to give investors a gift. Last time it happened was in the 80's and late last year it happened again -- the corporate tax rate was slashed.

For a steady business like Verizon (NYSE:VZ), which is used to low single-digit growth rates, a hefty tax cut really matters in terms of boosting after-tax EPS. For that reason, I believe that this year's dividend hike will be significantly higher than what investors have been accustomed to.

ChartVZ data by YCharts

As anyone who has ever seen a chart before can see, this stock is not moving anywhere. For the last five years, it has basically been moving in a range of approximately $44 on the low end up to $56 on the high end. Surprising it should not be, though, as this is not a growth stock but an income stock. Even so, taking growth out of dividend growth investing surely leaves out a large pool of potential investors.

Capital gains have been close to zero over the last five years. When we include dividends of between 4.5%-5%, however, we do arrive at a total return that beats the bank and bonds but still is well below the overall market.

Historical Dividend Growth

As the company itself reported last September, that year's dividend hike was the eleventh straight increase for the company. The increase was a modest 2.2%, just about in-line with inflation. This is the kind of magnitude investors have become used to. The growth rate is low but the yield, currently at 4.5%, is solid.

ChartVZ Dividend data by YCharts

Over the last five years the dividend has increased from $0.53 to $0.59 for a total increase of 11.3% or 2.7% annually. As stated above, this is putting off dividend growth investors, as the dividend can

This article was written by

Dividend Appreciator profile picture
I have been an investor for a number of years but it's only in the last couple of years that I have made dividends and, perhaps more importantly, the growth of them, the focus of my investment approach. My priority will therefore be on stocks that either pay stable and high dividends and/or are increasing them at a high rate.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.