1 Indicator Showcasing That Verizon's Ultra-High-Yield Dividend is on Solid Ground
Verizon (NYSE: VZ) is coming off a challenging year. While the telecom giant's revenue rose slightly, its earnings and cash flow were under pressure. That's a big reason its stock has shed nearly a quarter of its value since the start of last year. That slump has pushed its dividend yield up to 6.6%, which is well above the 1.7% dividend yield of the S&P 500.
While higher yields often hint that a payout is at a higher risk of a reduction if economic conditions deteriorate, Verizon's free cash flow indicates its dividend is on solid ground.
Verizon produced $37.1 billion of cash flow from operations in 2022. While that was down 6.1% from 2021 total because of higher device payment receivables (it pays vendors for new mobile devices that customers repay via installment plans), it provided the company with more than enough money to fund its capital spending and dividend outlay. The company's capital expenses totaled $23.1 billion, up from $20.3 billion in 2021, largely as a result of spending $6.2 billion on C-Band, the spectrum it needs to support its faster 5G network.
Source Fool.com
