1Q18 dividend yield
Verizon paid an annual dividend of $9.5 billion in 2017 to reward its shareholders. The dividend payments were $9.3 billion, $8.5 billion, $7.8 billion, $5.9 billion in 2016, 2015, 2014, and 2013.
In 1Q18, Verizon declared a quarterly dividend of $0.59 per share, up ~1.7% year-over-year (or YoY) from $0.58 per share in 1Q17. The quarterly dividend is equivalent to an annualized dividend of $2.36 per share and a dividend yield of 4.75% as of April 24. Compared to peers, AT&T (T) has a dividend yield of 5.71%.
Verizon’s balance sheet position
In 1Q18, Verizon’s cash flow from operations totaled $6.6 billion, up from $1.4 billion in 1Q17. Total debt was up $2.5 billion year-over-year to $119.1 billion, primarily due to an increase in asset-backed borrowings. However, the company expects the total debt balance to decline as it benefits from tax reform in 2018. Verizon expected savings from tax reforms to benefit cash flow from operations in 2018.
Total capital expenditure in the quarter was $4.6 billion, higher than the prior year’s capital spending of $3.1 billion. For 2018, the company predicts capital expenditure in the range of $17.0 billion to $17.8 billion, which is expected to be distributed more evenly throughout 2018.
The company has made a discretionary contribution of $1.0 billion in the quarter to improve the funded status of its pension plans, which should strengthen the balance sheet. Therefore, the company shouldn’t have to make any mandatory pension contributions until approximately 2026.