- Verizon’s forward yield near 6.8 percent remains one of the highest in the S&P 500 and shows strong free cash flow coverage.
- Improving subscriber trends and cost reductions support the sustainability of VZ dividends.
- Valuation remains discounted, though long-term debt considerations persist.
Verizon Dividend Strength Shows Stability
Verizon’s dividend continues to draw income investors, supported by a forward yield of roughly 6.79 percent. Shares trade near 40.65 with an annualized payout of 2.76, marking the company’s 20th consecutive annual raise.
Dividend growth remains modest at about 2 percent annually over the past decade, yet the consistency paired with a near 7 percent yield keeps VZ dividends attractive for DRIP strategies.
Improving Cash Flow Supports the High Yield
The company generated more than 20 billion in free cash flow in its latest reporting period. This comfortably covers the 11.6 billion required for dividends.
Stronger subscriber gains helped sentiment, reinforced by the summary about its highest net adds since 2019. These trends eased concerns about the sustainability of VZ dividends.
Management expects free cash flow to rise through 2029. Lower capital expenditures and multi-year cost cuts, including 13,000 job reductions announced for late 2025, align with the summary noting its cost-reduction strategy.
These measures point toward stronger margins, supporting dividend stability over the coming years.
Payout Ratio Remains Manageable
Verizon’s payout ratio sits near 58 percent based on free cash flow. While elevated, it remains manageable as the company anticipates growth in subscribers, earnings, and free cash flow through 2026.
These projections align with the summary describing its outlook for subscriber and FCF growth. Postpaid phone net additions recently hit their strongest level in six years, adding momentum to the company’s turnaround efforts.
Improved subscriber quality, steady pricing discipline, and ongoing cost controls reinforce confidence that VZ dividends can maintain their traditional low single digit growth rate.
Valuation Opportunity With Long Term Considerations
Morningstar’s dividend screen recently identified Verizon as the only major undervalued stock that raised its payout in January. Shares trade at just 8.7 times earnings, well below broader market multiples.
The company’s balance sheet remains the key long term watchpoint. A planned 25 billion share repurchase program through 2028 could pressure financial flexibility, as highlighted in the summary mentioning its capital-allocation risks.
Investors should watch how management balances debt reduction with shareholder returns if growth moderates.
What Dividend Investors Should Note
The near 7 percent yield remains well covered and appears secure over the next several years. Dividend growth is likely to stay modest but supported by cost efficiencies and subscriber momentum.
Valuation remains discounted relative to historical averages and sector peers, keeping VZ dividends appealing for income investors seeking stability. Long term risks remain centered on debt and the sizable buyback plan.
For dividend focused portfolios, Verizon continues to offer strong cash flow coverage, reliable income, and a long record of annual increases, making it a compelling high yield option within the communications sector.
