Verizon: Income Investors Beware

Verizon's (NYSE:VZ) stock has struggled to gain traction over the past 52 weeks. The telecom giant's share price has declined nearly 9% since a year ago and is less than 5% from its 52-week low crossed last month. With the price pressure, Verizon's dividend yield has approached 5%, making it attractive to income investors. When examining Verizon's dividend sustainability, a deep dive shows many concerns.

Verizon's financial performance has faced its share of headwinds. In the previous two quarters, Verizon's earnings have missed analyst expectations. Earnings growth has also been negative for four consecutive quarters. The decline in earnings is mainly being driven by the company's decline in revenue. Despite these top line and bottom line headwinds, Verizon's payout ratio of 61% over the past twelve months demonstrates Verizon's ability to pay dividends with earnings.


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