On a down Tuesday for U.S. equities, incumbent telecom stock Verizon (NYSE: VZ) managed to land well in positive territory. On speculation that the corporate is about to lift its already considerable dividend, investors snapped up its shares. This pushed its stock price nearly 3% higher, on a day when the S&P 500 index was within the red with a greater than 2% decline.
Dividend raise on the best way, say analysts
That morning, an analyst team at white-shoe investment bank Morgan Stanley opined that Verizon is days away from declaring a dividend raise. The prognosticators said that such an announcement is more likely to occur this Thursday, Sept. 5. Morgan Stanley anticipates a $0.05-per-share annual hike to the massive telecom‘s quarterly common stock payout, putting the following quarterly distribution at nearly $0.68 per share.
If realized, such a rise could be according to Verizon’s recent dividend raises. While the corporate is a frequent lifter, consistently adding to its payout every 12 months, its bumps are inclined to be small. On a quarterly basis, essentially the most recent one, declared last September, was barely over $0.01 per share.
Although Verizon is an efficient, very profitable telecom services provider and has good fundamentals, its shareholder distribution is clearly a significant a part of its appeal for a lot of investors. It’s a high-yield dividend at a rate of nearly 6.3%; this rate would remain unchanged with a $0.05 annual increase.
The corporate can afford it
Verizon’s money flow is thick and heavy, because it operates a business with hundreds of thousands of often paying subscribers. This implies it has plenty of monetary muscle helping it flex that top dividend. In the mean time, its money dividend payout ratio is under 80%, which indicates the distribution is well-funded and sustainable, barring any sudden catastrophe with the corporate.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Idiot recommends Verizon Communications. The Motley Idiot has a disclosure policy.
Why Verizon Stock Topped the Market on Tuesday was originally published by The Motley Idiot