Interactive Investor

ii view: income play Verizon ups free cash-flow forecast

Shares for this telecom giant have suffered a tough 2023 and sit on a highly attractive historic and estimated future dividend yield. Buy, sell, or hold?

24th October 2023 16:11

Keith Bowman from interactive investor

Third-quarter results to 30 September

  • Revenue down 2.6% to $33.3 billion (£27.3 billion)
  • Adjusted Earnings Per Share (EPS) down 8% to $1.22 (£1) 
  • Quarterly dividend up 1.9% from the previous quarter to 66.5 US cents per share (54.5p)
  • Unsecured debt down $4.2 billion from late December to $126.4 billion (£104 billion)

Chief executive Hans Vestberg said: We continued to make steady progress in the third quarter with a clear focus on growing wireless service revenue, delivering healthy consolidated-adjusted EBITDA and increasing free cash flow.

ii round-up:

Verizon Communications Inc (NYSE:VZ) today detailed quarterly earnings which beat Wall Street hopes with the US telecoms giant also raising its expectations for full-year free cash flow.

Third-quarter adjusted earnings of $1.22 exceeded analyst forecasts nearer to $1.18 per share with full-year free cash flow now expected to come in at over $18 billion and a $1 billion improvement from its previous forecast. 

Shares for the Dow Jones 30 company rose by more than 5% in US early trading having come into this latest news down around a fifth year-to-date. That’s similar to rival AT&T Inc (NYSE:T) and, in comparison, to a near-1% fall for the 30 index itself during 2023. 

Total Verizon broadband customers grew by a net 434,000 during the quarter to a total of 10.3 million. Postpaid mobile phone net additions of 100,000 helped total wireless service revenue climb 2.9% year-over-year to $19.3 billion.

Formerly Bell Atlantic, Verizon is today headquartered in New York and employs around 110,000 people. 

Group free cash flow year-to-date of $14.6 billion rose from $12.4 billion this time last year helping the dividend up 1.9% from the previous quarter to $0.665. 

Fourth-quarter results are likely to be announced in late January.    

ii view:

Verizon offers data, video and voice services, and solutions across its fixed and mobile networks. Generating revenues of almost $137 billion during 2022, it operates across the two divisions of Consumer and Business, with Consumer accounting for just over three-quarters of overall sales. Group goals include expanding its 5G business in the US and maintaining a healthy balance sheet.  

For investors, intense competition and a fall in revenues year-over-year is not to be ignored. An uncertain economic outlook including a cost-of-living crisis for consumers could see spending on communications cut or reduced. Costs for businesses generally remain elevated, while generating a return on its major 5G investments continues to occupy management.

On the upside, management initiatives to improve efficiency, including a previously announced $2-$3 billion cost-savings programme into 2025, continue. The pandemic has arguably added to the need for fast data from more locations, while an estimated future price earnings (PE) ratio below both the three- and 10-year averages suggests the shares are not obviously expensive. 

For now, and despite continued risks, a historic and estimated future dividend yield of over 8% is likely to see income-oriented investors at least staying patient.  


  • Focus on costs 
  • Attractive dividend (not guaranteed)


  • Intense competition
  • Unsecured debt of $126.4 billion

The average rating of stock market analysts:


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