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Verizon Communications Inc. (VZ)

Company Dividend Discount ModelIndustry: Telecommunications ServicesSector: Communication Services

Valuation Snapshot

Stable Growth$38.86 - $57.87$47.91
Multi-Stage$59.84 - $65.52$62.62
Blended Fair Value$55.27
Current Price$43.25
Upside27.79%
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 Rate9.10%9.10%9.10%
Growth Rate-0.51%0.49%1.49%
Fair Value$38.86$47.91$57.87
Upside / Downside-10.16%10.78%33.81%

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 Rate9.10%9.10%9.10%
Growth Rate-0.51%0.49%1.49%
Year 1 PV (M)11,586.4211,702.8911,819.35
Year 2 PV (M)11,635.7111,870.8012,108.24
Year 3 PV (M)11,586.3711,939.2812,299.29
Year 4 PV (M)11,455.4111,922.9812,404.73
Year 5 PV (M)11,257.5811,834.8612,435.58
PV of Terminal Value (M)195,431.35205,452.85215,881.31
Equity Value (M)252,952.85264,723.66276,948.50
Shares Outstanding (M)4,227.134,227.134,227.13
Fair Value$59.84$62.62$65.52
Upside / Downside38.36%44.80%51.48%

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