Month after month, like clockwork, you pay your wireless carrier for the services it provides.
But imagine that instead of just paying them, you’re also getting a piece of the pie — through dividends.
Wireless carriers and telecommunications companies in general often pay dividends. They operate in an essential industry with high barriers to entry, owing to the significant capital expenditure required for infrastructure and network maintenance.
At the same time, the recurring revenue model — where consumers pay monthly for services — ensures a consistent cash flow.
As a result, established industry players can pay generous dividends to shareholders.
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For instance, Verizon Communications Inc. (NYSE:VZ) is one of the biggest players in the telecom arena, generating $136.8 billion in revenue in 2022. The company also has a track record of paying dividends consistently and increasing them over time.
In the first half of 2023, Verizon paid shareholders $5.5 billion in dividends.
Last month, the company’s board of directors declared a quarterly cash dividend of 66.5 cents per share, representing a 1.9% increase from its previous payout. This marked Verizon’s 17th consecutive annual dividend hike.
At the current share price, the new dividend rate translates to an annual yield of 8.4%.
Collecting Dividends From Verizon
Verizon follows a quarterly distribution schedule. If you want to collect $1,000 per month from the company, you are looking at $3,000 per quarter. And that means you would need to own 4,511.28 shares of the company. This is calculated by dividing the $3,000 by the per-share quarterly payout of $0.665.
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And because Verizon currently trades at $31.54 per share, 6,542.45 shares would mean about $142,286 worth of the stock.
If you aim for a smaller target of earning $200 per month — or $600 per quarter — you would need 902.26 shares ($600/$0.665) or $28,457 worth of Verizon stock (902.26 x $31.54).
Despite the company’s solid dividend growth track record, shares can still be volatile. Year to date, Verizon stock has fallen about 21%.
Morgan Stanley analyst Simon Flannery sees better days ahead for Verizon. The analyst has an Overweight rating on the company and a price target of $44 — roughly 40% above where the stock currently sits.
Verizon is not the only wireless provider. Investors may also want to look into AT&T Inc. (NYSE:T) and T-Mobile US Inc. (NASDAQ:TMUS).
Stocks can fluctuate wildly, and even top analysts aren’t right 100% of the time, so always conduct comprehensive research and due diligence before diving in.
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This article How To Collect $1,000 Per Month From Your Wireless Carrier originally appeared on Benzinga.com
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