Verizon Or Lumen? Graham Would Have Figured It Out In 10 Minutes

Summary

  • In an earlier article published about 1 month ago, we cautioned investors about the risk of Lumen’s then ~10% dividend yield.
  • Our warning is based on a holistic analysis of its finances, which illustrated its dividend risks, especially when contrasted against Verizon.
  • Here we will elucidate these risks following a much simpler framework developed by Benjamin Graham.
  • You will see that these simple, yet timeless principles, would identify such risks in about 10 minutes.
  • These principles include stable capital structure, a long record of continuous dividend payments, and the use of the Graham PE and Graham number for valuation.
  • This idea was discussed in more depth with members of my private investing community, Envision Early Retirement. Learn More »

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Thesis

My last article comparing Verizon (NYSE:VZ) and Lumen (NYSE:LUMN) is co-produced with Sensor Unlimited. That article was published on Sept 09, 2022. In that article, entitled "Is LUMN's 10% Yield Too

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This article was written by

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Envision Research, aka Lucas Ma, has over 20+ years of investment experience and holds a Masters with in Quantitative Investment and a PhD in Mechanical Engineering with a focus on renewable energy, both from Stanford University. He also has 30+ years of hands-on experience in high-tech R&D and consulting, housing sector, credit sector, and actual portfolio management.

He leads the investing group Envision Early Retirement along with Sensor Unlimited where they offer proven solutions to generate both high income and high growth with isolated risks through dynamic asset allocation. Features include: two model portfolios - one for short-term survival/withdrawal and one for aggressive long-term growth, direct access via chat to discuss ideas, monthly updates on all holdings, tax discussions, and ticker critiques by request.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of VZ either through stock ownership, options, or other derivatives. 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.

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