Verizon soon expected to raise annual dividend, FWA targets: Morgan Stanley

Verizon Communications (NYSE:VZ ) is anticipated to raise its annual dividend for the 18th consecutive year in early September, with an announcement likely on Thursday, September 5, according to analysts at Morgan Stanley.

The investment bank expect a modest 5-cent increase, similar to last year’s hike, which would continue the company's consistent dividend growth since 2007.

The bank explains that Verizon's current quarterly dividend of 66.5 cents represents a manageable 58% payout on 2024 consensus earnings, indicating potential room for a larger increase.

However, analysts suggest that the market may prefer a buyback program in the future.

Analysts also highlight the potential for Verizon to raise its long-term Fixed Wireless Access (FWA) target in the coming weeks.

The company reported 3.8 million FWA customers at the end of the second quarter of 2024, with expectations to surpass the 4 million mark by the third quarter.

This achievement meets the low end of their 2025 target ahead of schedule. Verizon is expected to revisit and possibly increase its FWA targets, with new goals potentially announced during an upcoming conference or with the third-quarter earnings release on October 22.

Additionally, analysts say that Verizon’s ongoing deleveraging efforts position the company for potential buybacks in late 2025 or early 2026, as their CFO recently noted progress in reducing net unsecured debt to adjusted EBITDA.

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

Source: Investing.com