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Post by win1177 on Jul 17, 2023 19:13:13 GMT
Curious as to the thoughts of others concerning Verizon here. It has been slowly drifting down for a while, yield has risen to ~7%, which is covered by cash flow. Not much in the way of dividend “growth”, but slowly rising. I know a lot of people are concerned about debt loads, competition between mobile providers (AT&T, T-Mobile, possibly AMZN, etc.), possible “lead” in wiring, etc. Do you see it as a “buy” here, “hold”, or “sell”?
Thanks!
Win
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Post by richardsok on Jul 17, 2023 20:00:50 GMT
Curious as to the thoughts of others concerning Verizon here. It has been slowly drifting down for a while, yield has risen to ~7%, which is covered by cash flow. Not much in the way of dividend “growth”, but slowly rising. I know a lot of people are concerned about debt loads, competition between mobile providers (AT&T, T-Mobile, possibly AMZN, etc.), possible “lead” in wiring, etc. Do you see it as a “buy” here, “hold”, or “sell”? Thanks! Win I know you like to buy big cap blue chips and hold them indefinitely, win -- and was stunned to just see VZ chart when you called it to my attention, which I haven't normally followed. If VZ looks compelling at this "blood in the streets" price -- we just cannot predict what are the legal risks and replacement cost risks associated with lead cable. And it is also a compelling litigation target. We have seen other great corporations brought to their knees by litigation liabilities (remember Union Carbide?) -- OTOH, the cigarette companies with the biggest liabilities of all, seem to just keep rolling along. VZ is an enormous cash cow, easily supporting its dividend ... and then some. If I were an investor with your longer term philosophy, I would buy a relatively small position right here at its 13 year low! ( committing less than 5% of my port value) in the expectation management will probably muddle through. Sure, they will have to pony up enormous sums, maybe for years, but probably not so much it would impact the steady dividend (again, just like the tobaccos). What might tilt the scales in the SIZE of my buy is whether or not the div is qualified. Of course, it goes without saying I am not recommending -- merely responding with idle thoughts. You might poke around SeekingAlpha to check on recent articles. I have other areas of interest, so I will not be buying -- but VZ surely is interesting at these levels. Good luck whatever you decide. |
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Post by win1177 on Jul 17, 2023 20:35:55 GMT
Curious as to the thoughts of others concerning Verizon here. It has been slowly drifting down for a while, yield has risen to ~7%, which is covered by cash flow. Not much in the way of dividend “growth”, but slowly rising. I know a lot of people are concerned about debt loads, competition between mobile providers (AT&T, T-Mobile, possibly AMZN, etc.), possible “lead” in wiring, etc. Do you see it as a “buy” here, “hold”, or “sell”? Thanks! Win I know you like to buy big cap blue chips and hold them indefinitely, win -- and was stunned to just see VZ chart when you called it to my attention, which I haven't normally followed. If VZ looks compelling at this "blood in the streets" price -- we just cannot predict what are the legal risks and replacement cost risks associated with lead cable. And it is also a compelling litigation target. We have seen other great corporations brought to their knees by litigation liabilities (remember Union Carbide?) -- OTOH, the cigarette companies with the biggest liabilities of all, seem to just keep rolling along. VZ is an enormous cash cow, easily supporting its dividend ... and then some. If I were an investor with your longer term philosophy, I would buy a relatively small position right here at its 13 year low! ( committing less than 5% of my port value) in the expectation management will probably muddle through. Sure, they will have to pony up enormous sums, maybe for years, but probably not so much it would impact the steady dividend (again, just like the tobaccos). What might tilt the scales in the SIZE of my buy is whether or not the div is qualified. Of course, it goes without saying I am not recommending -- merely responding with idle thoughts. You might poke around SeekingAlpha to check on recent articles. I have other areas of interest, so I will not be buying -- but VZ surely is interesting at these levels. Good luck whatever you decide. Thanks RichardsOK! The dividend is qualified, so it is great option for me, as I have to pay higher taxes on “regular interest” from bonds. I already own a fairly large chunk of VZ, so just watching now. My “unrealized loss” is painful to look at, but thought about maybe buying some more to then sell some higher cost basis after 31 days for the tax loss. Just watching now, can’t believe it has come down this far! Litigation is one area I have learned (through painful investment losses!) to be more “careful” with! Have some unrealized losses with MMM, have had other losses in the past with some other stocks. Just going to watch for now, it came down pretty hard today, -7.5%! That’s after slowly drifting lower for a long time. Win |
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Post by bigseal on Jul 17, 2023 22:27:47 GMT
I’m having a difficult time imagining any scenario that would make me interested in buying VZ. The company is poorly managed. Plenty of other stocks to choose from within the US market.
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Post by steadyeddy on Jul 18, 2023 3:12:01 GMT
Bigger issue with VZ (and T) is the likely downgrade of their debt to junk, leave alone this "lead" thing which might prove to be a red herring or papered-over by the public utilities commissions (PUCs/PSCs) across various states - which had the obligation to oversee the construction of their facilities. Both VZ and T will implicate the PUCs.
These companies need to refinance a whole bunch of money in 2024 at much higher rates. Debt spiral playing out slowly right in front of our eyes.
The dividends will most likely be cut sooner than later.
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Post by bizman on Jul 18, 2023 5:29:15 GMT
I don't know if this will be at all helpful, but I'll add my $.02 to the matter. Over the last couple of years, I have decided that avoiding value traps is most important to me, especially in terms of dividend payers. I consider SCHD, imperfect though it may be, as the vehicle I use for getting exposure to slow growing dividend payers that may or may not be value traps. The thought being if they tank, the position sizes are relatively small, and the ROE and profitability screens and other rules that the index SCHD is based on determine position sizes for me.
I have further decided that I have no business owning individual stocks that I don't have some real conviction about in terms of various attributes: management quality, sustainable competitive advantages (moats), industry competitive dynamics, growth prospects, the tendency to under promise and over deliver, etc. If I don't have conviction, I either had to have 100 - 1% positions, or go more the ETF route. So my current equity position is over 50% in ETFs (SCHD, VIG, VPU, etc.).
Therefore, I am out of individual stocks like VZ and PFE and have been for quite a while. With VZ, I think management stinks and continues to give positive guidance despite negative developments (I'm not a Hans Vestberg fan), and they have lost their technological and reputational advantage with their network quality. The feds set them up with a terrifically positioned competitor in T-Mobile with all of Sprint's mid-band 5G spectrum. It's basically a commodity business where every few years the gov't frees up more spectrum that the companies need to spend $10+ Billion on, and annual maintenance and other recurring Capex is in the $10 - $20 billion range. They have a lot of debt and zero pricing power. This is not the kind of individual business I'm very interested in anymore.
Add on the potential liability for the lead issue and it doesn't make it more appetizing to me. Maybe it's cheap enough current buyers will make a killing. I have no particular reason to think I know that. But the $100+ billion of debt is real. VZ and T always talk about paying down debt, but it never really seems to happen. If they need to choose in the future between debt and the dividend, the debt will win. Then again they do have a lot of cash flow. If I believed in management I might feel differently, but both Stankey at AT&T and Randall Stephenson before him have destroyed more value than anyone but Putin has in Ukraine. And I don't think much more of Vestberg.
For individual stock holdings, I'm more in the Buffett camp of wanting to pay a fair price for a wonderful business than a wonderful price for a fair (or poor) business. Just the place I'm at now in my investment journey. Best wishes to all.
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Post by richardsok on Jul 18, 2023 12:15:08 GMT
Debt is unquestionably an issue, biz, but the numbers suggest maintaining both dividends and debt payments may be doable... even with a liability problem. We ARE talking about an enormous cash cow here, after all... and VZ communications service is still growing. From analysts I read 12-month targets vary from $37 to $64/sh, with an average of about $43. With the new risks coming out, skew that toward the lower estimates, probably.
But by all means, if you have recent data that refutes my notions, let's see 'em.
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Post by retiredat48 on Jul 18, 2023 14:25:31 GMT
bizman,...nice post bizm To add: I have been noticing how relatively empty the Verizon stores are here in Florida...even during peak season. some closed/consolidated. I note SCHD is 3.5+% Verizon in portfolio. I didn't see any ATT in top 25 holdings. Why do I sense that Verizon will be one of those companies who become less and less relevant, and finally out of business. I've seen many in my lifetime. Disclosure...I'm not a stock picker. R48
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Post by bizman on Jul 18, 2023 14:45:31 GMT
Debt is unquestionably an issue, biz, but the numbers suggest maintaining both dividends and debt payments may be doable... even with a liability problem. We ARE talking about an enormous cash cow here, after all... and VZ communications service is still growing. From analysts I read 12-month targets vary from $37 to $64/sh, with an average of about $43. With the new risks coming out, skew that toward the lower estimates, probably. But by all means, if you have recent data that refutes my notions, let's see 'em. No, I don't have any such data. As I indicated in my post, I just don't have conviction enough to make it an individual holding in my portfolio at a 2-5% position size. I do own some VZ through my holding of SCHD, as according to the latest holdings data at M* as of 7-15-23 it is a 3.75% holding of the ETF. I'm just more comfortable owning such potential value traps through a rules-based index where it isn't a big % of my overall portfolio. I'm not saying anyone should follow what I do. Just sharing my rationale, for better or worse. Different opinions make markets. |
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Post by anitya on Jul 18, 2023 18:51:55 GMT
win1177 , If you have a fairly large position in this, why escalate your commitment. I do not advice all or nothing bets. If the idea is not to earn taxable interest income on your cash equivalents, I would buy growth or growth adjacent stocks, which pay lower cash yields and most should be QDI. I would buy something like CISCO over VZ for you. Should you have a strong need to scratch that itch, I would buy some out of the money, long dated call options - smaller outlay and more bang for the buck. VZ and T probably will be around for the rest of our lives but I am trying to avoid proven irritants. I have not looked up any of the tickers. Running behind schedule today but wanted to help.
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sam
Lieutenant
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Post by sam on Jul 26, 2023 22:12:19 GMT
In my Opinion, both Verizon (VZ) and T are stocks but they are trading like bonds where their dividends are below secure, unsecured bonds and preferred shares. Now there is a litigation risk. You can see charts of stocks when when they were in long term litigation periods to make your mind.
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Post by steadyeddy on Jul 27, 2023 2:46:47 GMT
DOJ/EPA both starting an investigation into the lead-sheathed copper cables. T has more and VZ has less but both will likely trade in sympathy with VZ having a slightly better results.
T said they have 200,000 linear miles of lead-sheathed copper cables. How long have they known it? Who all knew it? This is bad.
Higher rates means their debt is a headwind, litigation means unquantifiable valuation risk.
As I said before, their debt could take a hit in terms of investment grade.
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sam
Lieutenant
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Post by sam on Aug 2, 2023 23:44:46 GMT
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