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How Verizon Has Been Returning Value to Shareholders

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Apr. 23 2019, Published 10:59 a.m. ET

Verizon’s dividend yield

Verizon Communications (VZ) has been consistently increasing dividends over the past few quarters. In the first quarter, Verizon declared a quarterly dividend of $0.6025 per share, up ~2.1% YoY. The telecom company paid total dividends of $2.5 billion in the first quarter. Verizon reported a free cash flow (or FCF) balance of $2.8 billion in the first quarter, up from $2.1 billion in the first quarter of 2018, which supported its generous dividend payout.

Long-term investors tend to prefer stocks that have better dividend yields and dividend growth. Verizon’s dividend yield was ~4.1% as of April 22, lower than AT&T’s (T) ~6.4%. T-Mobile (TMUS) and Sprint (S) don’t pay equity dividends.

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Verizon’s scale

As of April 22, Verizon’s market capitalization was $241.2 billion, making it the largest US mobile operator in terms of market capitalization. In comparison, Sprint had a market capitalization of $24.0 billion, AT&T’s market capitalization was $233.7 billion, and T-Mobile’s market capitalization was $62.7 billion.

Verizon’s forward PE ratio

On April 22, Verizon was trading at a 12-month forward PE ratio of 12.41x. In comparison, T-Mobile, AT&T, and Sprint were trading at 12-month forward PE ratios of 17.84x, 8.92x, and 141.62x, respectively.

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