Verizon Communications is an Overlooked Dividend Stock
VZ Stock Has a High Dividend Yield of 5.09%
Finding a dividend-paying stock is very easy to find since it only takes a few seconds searching online. But what if you also want a stock that offers both dividend income and capital preservation? While these all tend to go hand and hand, that is not always the case.
A company that pays out a dividend will have lower daily volatility compared to the overall markets. This is because returns come via both dividend income and capital gains, based on the stock price increasing. A growing dividend means volatility is reduced even further, since the market notices the growth.
One company with a stock that offers all this is Verizon Communications (NYSE:VZ). Its stock also boasts a high dividend yield, meaning an annual dividend return that is greater than the average return on the overall markets.
VZ stock is offering a dividend yield of 5.09%, paid every February, May, August, and November. It is reviewed once a year. When the opportunity does come the management ensures that the dividend is increased to ensure that a piece of the profits are given to shareholders since they are part owners of the company. Below is the table of the dividend per share (DPS) for the past five years.
||Record Date||Payment Date|
|July 06, 2017||$0.58||N/A||June 01, 2017||July 10, 2017||August 01, 2017|
|April 06, 2017||$0.58||N/A||March 03, 2017||April 10, 2017||May 01, 2017|
|January 06, 2017||$0.58||N/A||December 01, 2016||January 10, 2017||February 01, 2017|
|October 05, 2016||$0.58||2.2%||September 01, 2016||October 07, 2016||November 01, 2016|
|July 06, 2016||$0.57||N/A||June 02, 2016||July 08, 2016||August 01, 2016|
|April 06, 2016||$0.57||N/A||March 04, 2016||April 08, 2016||May 02, 2016|
|January 06, 2016||$0.57||N/A||December 03, 2015||January 08, 2016||February 01, 2016|
|October 07, 2015||$0.57||2.7%||September 03, 2015||October 09, 2015||November 02, 2015|
|July 08, 2015||$0.55||N/A||June 04, 2015||July 10, 2015||August 03, 2015|
|April 08, 2015||$0.55||N/A||March 06, 2015||April 10, 2015||May 01, 2015|
|January 07, 2015||$0.55||N/A||December 04, 2014||January 09, 2015||02/02, 2015|
|October 08, 2014||$0.55||3.8%||September 04, 2014||October 10, 2014||November 03, 2014|
|July 08, 2014||$0.53||N/A||June 05, 2014||July 10, 2014||August 01, 2014|
|April 08, 2014||$0.53||N/A||March 07, 2014||April 10, 2014||May 01, 2014|
|January 08, 2014||$0.53||N/A||December 05, 2013||January 10, 2014||February 03, 2014|
|October 08, 2013||$0.53||2.90%||September 02, 2013||October 10, 2013||November 01, 2013|
|July 08, 2013||$0.52||N/A||June 06, 2013||July 10, 2013||August 01, 2013|
|April 08, 2013||$0.52||N/A||March 08, 2013||April 10, 2013||May 01, 2013|
|January 08, 2013||$0.52||N/A||December 06, 2012||January 10, 2013||February 01, 2013|
|October 05, 2012||$0.52||3.0%||September 06, 2012||October 10, 2012||November 01, 2012|
The dividend has been increased for 10 consecutive years. And with approximately $0.75 of every dollar of earnings paid out to investors, future dividend hikes are possible.
Also keep in mind that Verizon is part of the oligopoly that currently controls the telecommunication sector. Sharing a large market share with only a handful of direct competitors, as well as the costs of starting a telecom business and government regulations, means new competition is unlikely. These all protect Verizon’s revenue and market share.
Preservation of Capital
Preservation of capital is measured by the daily movement of the stock. The goal for investors is to find a stock that does not see much movement to the downside, in addition to the aforementioned growth.
Luckily, Verizon stock does offer the benefit of very low daily volatility on a daily basis. If the market fell by one percentage point, on average VZ stock would see a drop of approximately 0.31%. This would add up greatly as time passes; a fall for one straight week would mean a -1.55% return for VZ stock, for instance.
Also consider the return from the dividend yield, which could result in a positive return, since the total return would be based on the dividend income and stock price gains.
Final Thoughts About VZ Stock
It’s not every day that you find a great business that offers a high and growing dividend yield. And a growing dividend is much better and faster for achieving one’s investing goals due to the higher return and income that should be earned.
The preservation of capital also helps in this regard, and important and often forgotten piece of information. After all, to turn a $100,000 investment into $200,000 requires a gain of 100%. But if the $100,000 turned into $50,000, then you would need a gain of 300%, which is, needless to say, more difficult to accomplish. By focusing on capital preservation from the get-go, you wouldn’t have to take on as much risk to meet your goals.