Verizon's Generous Dividend Yielding 6%: A Steady and Unwavering Source of Income for Investors
Verizon, the leading wireless service provider in the United States, has announced impressive results for the second quarter of the year. The company's revenue grew by 2.2% to an industry-leading $20.9 billion, marking a significant milestone.
The telecom giant also reported a 5.3% increase in overall revenue to $34.5 billion, with adjusted earnings rising 6.1% to $1.22 per share. These numbers confirm Verizon's dividend as a safe investment, given the company's strong and growing free cash flow.
Verizon's free-cash-flow guidance has also been boosted, with the company now expecting to generate between $19.5 billion and $20.5 billion, up from the previous estimate of $17.5 billion to $18.5 billion.
The company's focus on expanding its broadband business has yielded positive results, with Verizon adding over 300,000 net mobility and broadband customers in the second quarter. Fios, Verizon's fiber-optic service, gained market share during this period.
One of the key drivers of Verizon's growth is its investment in capital expenses. The company invested $8 billion in the first half of the year to maintain and expand its fiber and 5G networks. This investment is set to increase with the upcoming acquisition of Frontier, which is expected to significantly expand Verizon's fiber network.
The Frontier acquisition will not only enhance Verizon's ability to continue growing its broadband business but also bolster its fiber offering. The deal should close in the next year, subject to regulatory approval and other customary closing conditions.
Verizon's improving financial position is another factor contributing to its growth. The company ended the period with a 2.3 times leverage ratio, down from 2.5x in the year-ago period. This improved leverage ratio enhances Verizon's financial flexibility ahead of its $20 billion all-cash acquisition of Frontier.
Verizon has also benefited from several recent initiatives aimed at strengthening customer retention and attracting new customers. These initiatives, coupled with the recent tax changes, have put Verizon on track to produce even more excess free cash this year.
In terms of future acquisitions, while Verizon is preparing for the Frontier deal, no other company in the provided data plans a larger all-cash acquisition of approximately $20 billion next year to significantly expand its fiber network.
Finally, Verizon has raised its full-year guidance for adjusted earnings per share, expecting a 1% to 3% increase, up from its prior outlook of flat to up 3%. This optimistic outlook, coupled with the expected boost from the Frontier deal, suggests that the payout's safety should only strengthen.
With more growth ahead and a solid financial foundation, Verizon continues to lead the U.S. telecom sector, having raised its dividend payment for 18 straight years. The company's strong second-quarter results underscore its commitment to delivering value to its shareholders.
