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Verizon Communications Inc. (VZ)

Company Dividend Discount ModelIndustry: Telecommunications ServicesSector: Communication Services

Valuation Snapshot

Stable Growth$38.93 - $58.01$48.01
Multi-Stage$60.02 - $65.72$62.82
Blended Fair Value$55.41
Current Price$43.25
Upside28.13%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS2.35%3.73%2.662.612.562.472.422.372.312.242.192.02
YoY Growth--2.03%2.04%3.45%2.08%2.16%2.50%3.17%2.27%8.48%9.42%
Dividend Yield--5.87%6.17%6.57%4.85%4.16%4.41%3.91%4.69%4.49%3.73%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)19,837.00
(-) Cash Dividends Paid (M)11,419.00
(=) Cash Retained (M)8,418.00
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)3,967.402,479.631,487.78
Cash Retained (M)8,418.008,418.008,418.00
(-) Cash Required (M)-3,967.40-2,479.63-1,487.78
(=) Excess Retained (M)4,450.605,938.386,930.23
(/) Shares Outstanding (M)4,227.134,227.134,227.13
(=) Excess Retained per Share1.051.401.64
LTM Dividend per Share2.702.702.70
(+) Excess Retained per Share1.051.401.64
(=) Adjusted Dividend3.754.114.34
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate-0.51%0.49%1.49%
Fair Value$38.93$48.01$58.01
Upside / Downside-9.99%11.01%34.13%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)19,837.0019,933.4220,030.3020,127.6520,225.4820,323.7820,933.50
Payout Ratio57.56%64.05%70.54%77.03%83.51%90.00%92.50%
Projected Dividends (M)11,419.0012,767.6214,129.0715,503.4616,890.8718,291.4119,363.49

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate-0.51%0.49%1.49%
Year 1 PV (M)11,588.3411,704.8211,821.30
Year 2 PV (M)11,639.5511,874.7212,112.24
Year 3 PV (M)11,592.1111,945.1912,305.38
Year 4 PV (M)11,462.9711,930.8512,412.92
Year 5 PV (M)11,266.8811,844.6312,445.84
PV of Terminal Value (M)196,171.71206,231.17216,699.14
Equity Value (M)253,721.55265,531.39277,796.82
Shares Outstanding (M)4,227.134,227.134,227.13
Fair Value$60.02$62.82$65.72
Upside / Downside38.78%45.24%51.95%

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