A Second Look at Verizon (VZ) following it dividend growth.

Verizon (VZ) was in the news today for raising its dividend from $0.48 to $0.50 per quarter.  http://www.reuters.com/finance/stocks/VZ/key-developments/article/2394529 .  Is Verizon a buy at $36.17 given its dividend increase?

Verizon (VZ)

Market price: $36.17

Market cap: $102.38 billion


Dividend record: VZ has been paying dividends for over a decade.  There are some gaps and some cuts.

Dividend: $0.50 quarterly (raised from $0.48 last quarter)

Dividend yield: 5.5% ($2.00 annual dividend / $36.17 price)

Dividend payout ratio: 89% (if you use the $2.00 dividend / $2.24 TTMs EPS), 116% (if you use $2.00 / $1.72 five year avg. EPS)

Earning power: $1.72 @ 2.833 billion shares

            EPS       Net inc.             Adj. EPS            Shares

2006     $2.12    $6,197 M           $2.19                2.938 B

2007     $1.90    $5,521 M           $1.95                2.902 B

2008     $2.26    $6,428 M           $2.27                2.850 B

2009     $1.29    $3,651 M           $1.29                2.841 B

2010     $0.90    $2,549 M           $0.90                2.833 B

Five year average adjusted EPS = $1.72

Consider buying at or below $20.64 (12 times average earnings).  This price was last seen in November 2009.

Consider selling at or above $34.40 (20 times average earnings)

It is selling time because Verizon is trading at 21 times average earnings.  This is speculative.

Balance sheet: down slightly and stagnant; not strong.


Book value: $13.61 per share

Price to book value: 2.66  ($36.17 price / $13.61 BV).  This is good.

Current ratio: 0.82 (latest quarter; over 2.0 is good)

Quick ratio: 0.67 (latest quarter; over 1.0 is good)

Disclosure: I don’t own Verizon (VZ)

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Published in: on September 1, 2011 at 4:21 pm  Leave a Comment  

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