Is Verizon's 6.6% Dividend Yield Sustainable?
Verizon Communications (NYSE: VZ) shares currently yield roughly 6.6%. Investors are often attracted to high-yield stocks for their income potential. However, high dividend yields can sometimes be a sign that the dividend is not safe because market participants often anticipate a cut to the payout in advance.
Recent examples of high-profile companies that have slashed their dividends include Verizon peer AT (NYSE: T), which cut its payout nearly in half in 2022, and Walgreens Boots Alliance, which recently reduced its dividend by almost 50%, ending 47 years of dividend growth. Prior to AT's dividend reduction, the stock was yielding more than 8.5%. Walgreen shares were yielding over 7.5% before the company decided to slash the dividend.
Verizon currently pays a quarterly dividend of $0.665 per share, which equates to $2.66 on an annual basis, and it expects fiscal 2024 adjusted earnings per share (EPS) of $4.50 to $4.70. Thus, the company has a payout ratio of roughly 58%. Adjusted EPS is an appropriate measure to use to get a sense of the business's true earnings power because it excludes the impact of one-time events such as restructuring charges and legal settlements.
Source Fool.com
Verizon Communications Inc. Stock
With 19 Buy predictions and not the single Sell prediction the community is currently very high on Verizon Communications Inc..
As a result the target price of 44 € shows a positive potential of 23.84% compared to the current price of 35.53 € for Verizon Communications Inc..
