Portfolio Update
The FiveTwenty portfolio received $29.29 in dividends in the past week. OZK paid its quarterly dividend during the week.
| Past Week Dividend | $29.29 |
| Current Quarter Dividend (Q4 2021) | $275.29 |
| LifeTime Dividend | $1,376.62 |
| Estimated Annual Dividend | $3,149.87 |
The capital allocation for the week of 10/24/2021 to 10/30/2021 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 34 of 2021, the company reported Q3 2021 earnings on 10/20/2021. Additionally, the share price decreased 4.66% from $55.52 to $52.93 during the same period.
| TTM | Prev. Update | 10-year median | |
| Dividend Streak | 15 years | 14 years | |
| Yield | 4.77% | 4.53% | 4.46% |
| Payout Ratio | 47.5%1 | 48.8%2 | NA |
| P/E | 9.991 | 10.82 | NA |
1computed using TTM adjusted EPS of $5.30 as of Q3 2021
2computed using TTM adjusted EPS of $5.14 as of Q2 2021
Q3 2021 earnings report
Did VZ’s latest earnings report raise any warning flags?
In Q3 2021, VZ grew revenue, net income, and EPS (adjusted and GAAP) over the same period a year ago. The growth was accompanied by 129,000 total broadband net additions and 699,000 wireless retail postpaid net additions. Overall, revenue grew 4.3%, net income increased 45.5%, and adjusted EPS were 12.8% higher compared to Q3 2021.
| Revenue (in millions) | Net Income (in millions) | Adj. EPS . | |
| Q3 2020 | $31,543 | $4,504 | $1.25 |
| Q3 2021 | $32,915 | $6,554 | $1.41 |
| % Change | 4.3% | 45.5% | 12.8% |
Additional noteworthy developments during the quarter:
- VZ completed the sale of Verizon Media to Apollo funds for $706 million on September 1, 2021.
- Increased the dividend for a 15th year, when on 10/03/2021 it announced a dividend of $0.64 per share payable on 11/01/2021 with an ex-Dividend date of 10/07/2021.
Looking ahead, the company guided for wireless revenue growth of around 4%. The update puts the expectation at the high end of the previous guidance of 3.5% – 4.0%. Additionally, VZ increased the EPS guidance to $5.35 to $5.40 from the prior expectation of $5.25 to $5.35.
Thesis
Why are we adding VZ to the FiveTwenty portfolio?
VZ continued the trend of solid financial results in 2021 with the strong Q3 2021 results. Our investment thesis from the original review of the company remains unchanged and we are happy to add to our position in the company at a reasonable valuation and above average initial dividend yield.
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