Verizon's dividend track record leaves a little something to be desired, especially when inflation (as measured by the CPI) was around 2.1% annualized over the same period. Verizon does have a fairly good balance sheet backed by hard assets and it can cover its interest payments a few times over. Indeed, Morningstar gives it an "A-" credit rating. There's little question that Verizon can raise debt when needed -- though it's been rapidly paying down debt in the past year -- but in terms of maintaining the current dividend, the answer isn't quite as certain. Both the earnings and free cash flow to equity cover, for instance, has been weak in recent years.
Comparing Verizon's Dividend Report Card score to AT&T's score of "B" it's easy to see there are some key differences between the two U.S. telecom giants. Maybe Verizon's prospects will improve with the introduction of the iPhone to Verizon Wireless, but as of right now, the dividend opportunity isn't too exciting.
Source: Motley Fool
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