Portfolio Update
The FiveTwenty portfolio received $382.93 in dividends in the past week. AFL, BKH, ENB, FTS, INTC, SJM, and SWX paid their quarterly dividends during the week.
| Past Week Dividend | $382.93 |
| Current Quarter Dividend (Q4 2022) | $1,040.45 |
| LifeTime Dividend | $7,335.73 |
| Estimated Annual Dividend | $7,345.59 |
The capital allocation for the week of 12/04/2022 to 12/10/2022 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 31 of 2022, the company reported Q3 2022 earnings on 10/21/2022. Furthermore, the share price decreased 17.3% from $46.19 to $38.18.
| TTM | Prev. Update | 10-year median | |
| Dividend Streak | 18 years | 17 years | |
| Yield | 6.74% | 5.54% | 4.46% |
| Payout Ratio | 48.63%1 | 47.58%2 | |
| P/E | 7.221 | 8.592 |
1 computed using TTM adjusted EPS of $5.28 as of Q3 2022
2 computed using TTM adjusted EPS of $5.38 as of Q2 2022
Q3 2022 earnings report
Did VZ’s latest earnings report raise any warning flags?
For Q3 2022, VZ reported revenue growth of 4% year over year, while net income and adjusted EPS decreased compared to the year ago quarter. The revenue growth was powered by a 10% increase in wireless services revenue. The company also saw 8000 postpaid phone and 377,000 broadband net additions in the quarter.
Overall, revenue grew 4%, net income decreased 23.3%, and adjusted EPS were 7% lower than in Q3 2021.
| Revenue (in millions) | Net Income (in millions) | Adj. EPS . | |
| Q3 2021 | $32,915 | $6,554 | $1.42 |
| Q3 2022 | $34,241 | $5,024 | $1.32 |
| % Change | 4% | (23.3)% | (7)% |
Additional noteworthy developments during the quarter:
- VZ started a new cost savings program that is expected to reduce annual costs by between $2 billion and $3 billion by 2025.
- The company’s unsecured debt as of the end of Q3 decreased by $1.1 billion sequentially to $131.4 billion.
Looking ahead, VZ reiterated is forecast of wireless service revenue growth of 8.3% to 9.5% and adjusted EPS of $5.10 to $5.25.
Thesis
Why are we adding to our position in VZ?
We believe that VZ will continue to be a source of reliable dividends in the future. Therefore, we view the current share price as an opportunity to build our position at a very attractive yield and valuation.
Previous Articles
- 2022 Week 31: Verizon Communications (NYSE: VZ)
- 2021 Week 43: Verizon Communications (NYSE: VZ)
- 2021 Week 34: Verizon Communications (NYSE: VZ)
- 2021 Week 28: Verizon Communications (NYSE: VZ)
Additional Research
Photo by Leon Bredella on Unsplash