Spotlight: Turn $15k Into $1,000 Every Year

When we first spotlighted Verizon, it had a yield that approached 8% but after its recent move higher, it still offers a handsome yield of over 6.4%.

That’s more than enough to turn a $15,000 investment into an annual payout of $1,000+, assuming the dividend stays in place, but will it?

Here’s what you need to know about Verizon and its potential to pay a steady income stream for the foreseeable future.

Key Points

• Verizon has a 41 year history of paying out dividends and a 19 year growth streak.
• It’s a cash flow monster with a business model that is unlikely to be interrupted anytime in the near future.
• Analysts also forecast modest upside for the share price in addition to the generous yield.

Is Verizon Dividend Safe?

Trading close to $40 per share, Verizon’s $2.66 per share annual payout is a really generous yield when compared to the S&P 500 average. It’s so good that a $15,000 investment could produce north of $1,000 each and every year, assuming the dividend continues to be paid.

To gauge whether that will happen, the first thing to look at is the payout ratio. Verizon’s figure is 94%, a high number no doubt. Usually if it eclipses 100%, concerns over the sustainability of the dividend arise.

What should provide investors with some solace beyond the payout ratio is that management has succeeded in hiking the dividend for 19 years straight. That’s the type of longevity to inspire confidence.

But beyond the headline figures is the core business model that is tethered to one of the most addictive products on planet earth, the smartphone. As one of the leading carriers, Verizon offers a crucial service that prints enormous amounts of cash. Last quarter alone, levered free cash flows were $4 billion, a number so large that there is little question the dividend is likely to be paid for the foreseeable future.

Now let’s turn our attention to the stock, is it a good one to buy?

Will Verizon Stock Go Up?

Buying Verizon stock is primarily a play on the dividend. If analysts are correct, there is still some fuel left in the tank to drive the share price higher by another 10% or so up to $44 per share, but don’t expect liftoff anytime soon. This is no AI stock, but rather a cash flow monster.

It has a 41 year history of paying a steady dividend to investors and that predictable income is the primary play for anyone considering buying. It’s also a stock that trades with fairly low volatility so it can be trusted not to surprise a whole lot, as say a high growth tech stock might.

Analysts on the whole expect the stability to continue this year with profitability forecast once again for 2024, though it’s notable that sentiment has dimmed somewhat with 5 analysts downgrading earnings expectations over the next year.

Nonetheless, don’t expect any material change in Verizon over the near-term. If you’re looking for a steady and reliable dividend with some upside potential, Verizon continues to be a one worthy of staying on your radar.