Verizon Communications Dividend Expectations

Verizon Communications (NYSE:VZ) is expected to increase its annual dividend for the 18th consecutive year this September, likely announcing it on Thursday, September 5, as predicted by analysts at Morgan Stanley.

Dividend Increase

The investment bank anticipates a modest 5-cent increase, mirroring last year’s hike. This would extend the company’s steady dividend growth trajectory since 2007. Currently, Verizon’s quarterly dividend stands at 66.5 cents, representing a manageable 58% payout ratio based on 2024 consensus earnings. This suggests room for a more significant increase in the future.

Market Preferences and Growth

Analysts note that the market may favor a buyback program moving forward. Additionally, there’s potential for Verizon to raise its long-term Fixed Wireless Access (FWA) targets in the coming weeks. At the end of Q2 2024, the company had 3.8 million FWA customers and is expected to exceed 4 million by Q3, which aligns with their 2025 target.

Future Prospects

There are expectations that Verizon will revise its FWA targets, with announcements likely during an upcoming conference or with the Q3 earnings release on October 22. Moreover, the company’s ongoing deleveraging initiatives could enable potential buybacks by late 2025 or early 2026, as progress is being noted in lowering net unsecured debt to adjusted EBITDA.

Morgan Stanley has an Overweight rating on Verizon, with a target price of $46, forecasting a 17% total return over the next 12 months.