2021 Week 34: Verizon Communications (NYSE: VZ)

Portfolio Update

The FiveTwenty portfolio received $75.92 in dividends in the past week. ABBV and PG paid their quarterly dividend during the week.

Past Week Dividend$75.92
Current Quarter Dividend (Q3 2021)$197.07
LifeTime Dividend$702.41
Estimated Annual Dividend$2,442.57
Dividend Scorecard

The capital allocation for the week of 08/22/2021 to 08/28/2021 will be used to add to our position in Verizon Communications (NYSE: VZ)

VZ – Position Update

Since our last check-in on VZ in week 28 of 2021, the company reported Q2 2021 earnings on 07/21/2021. Additionally, the share price decreased 0.9% from $56.07 to $55.52 during the same period.

TTMPrev. Update10-year median
Dividend Streak14 years14 years
Yield4.53%4.48%4.52%
Payout Ratio48.8%150.7%2NA
P/E10.8111.332NA
Entry Criteria Scorecard

1 computed using TTM adjusted EPS of $5.14 as of Q2 2021
2 computed using TTM adjusted EPS of $4.95 as of Q1 2021

Q2 2021 earnings report

Did VZ’s latest earnings report raise any warning flags?

In Q2 2021, VZ grew revenue, net income, and EPS (GAAP and adjusted) over the same period a year ago. The increases were driven by growth in wireless revenue, strong FIOS and Verizon Media results, and increase in wireless equipment sales. Overall, revenue grew 10.9%, net income increased 22.9%, and adjusted EPS were 16.1% higher compared to Q2 2020.

Revenue
(in millions)
Net Income
(in millions)
Adj. EPS
.
Q2 2020$30,447$4,836$1.18
Q2 2021$33,764$5,949$1.37
% Change10.9%22.9%16.1%

Additional noteworthy developments during the quarter:

  • VZ announces and agreement to sell Verizon Media to Apollo funds. The transaction has an expected close data in the second half of 2021.

Following the strong Q2 2021 financial results, VZ raised full year guidance for wireless revenue growth from 3% to 3.5%-4.0%, and adjusted EPS from a previous $5.00-$5.15 to $5.25-$5.35. The capital expenditures guidance remained unchanged at $17.5-$18.5 billion. At the same time it withdrew guidance for total revenue growth due to the same of the Verizon Media Group.

Thesis

Why are we adding to our position in VZ?

Following a solid Q1 2021, VZ had strong Q2 2021 earnings. With no negative surprises in the earnings report our thesis from the previous update still holds, and we happy to add to our position at a similar price point.

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