Revenue and EPS of Verizon
Verizon Communications (VZ) recorded revenue growth of -4.3% in 2016 compared to 4% in 2015. The wireless and wireline segments mainly drove the decline in 2016. The 2015 performance was mainly due to the decline in wireline revenue. The 4% negative revenue growth for 1H17 has been driven by a decline in its wireless segment and flat growth in its wireline segment. The company noted a 27% decline in 2016 EPS after 80% growth in 2015. This decline was due to the lower operating income in 2016 offset by stable operating costs and lower interest costs. The 55% EPS growth in 1H17 was due to operating income growth and lower other costs offset by interest costs. The company didn’t generate enough annual free cash flow balance in 2016 to honor its dividend obligations unlike in the previous years.
Dividend trajectory of Verizon
We can see the downward sloping dividend yield curve of Verizon Communications between 2015 and 2016 despite the increase in dividend per share. This trend is due to the rising prices offsetting the impact of the dividend increase. However, the slope of the dividend curve has recorded an upward shift post-2016 due to the dropping prices. Verizon Communications has a dividend yield of 4.7%. It has witnessed a YTD price loss of 6.5%. This compares to a dividend yield of 2.3% and YTD price gains of 14.7% by the Dow Jones Industrial Average (DJIA-INDEX) (DIA). The S&P 500 (SPX-INDEX) (SPY) has a dividend yield of 2.4% and YTD price gains of 13.3%. The NASDAQ Composite (COMP-INDEX) (ONEQ) has YTD price gains of 21.4%.
The First Trust Morningstar Dividend Leaders (FDL) is a dividend ETF with exposure to Verizon Communications. It offers a dividend yield of 3.2% and a PE of 19.9x. Oppenheimer Ultra Dividend Revenue ETF (RDIV) is a dividend ETF with exposure to Verizon Communications. It offers a dividend yield of 3.7% and a PE of 16.3x.