Verizon's CEO Calls Its 6.6% Dividend "Sacrosanct." How Safe Is It Really?

Verizon raised its dividend for the 19th consecutive year to a 6.6% yield and CEO Daniel Schulman called the payout “sacrosanct,” but acknowledged the company must execute a turnaround after losing roughly 30% market share since 2017 and slipping to the No. 3 industry position. The business still generates scale—$134.8 billion in 2024 revenue and 146.1 million wireless retail connections—and showed operational progress with 306,000 broadband net adds, 13.2 million broadband subscribers, $7 billion of free cash flow in Q3 and $9.4 billion of debt paydown, which leaves the next-quarter dividend obligation of $2.92 billion well covered. However, dividend hikes have been minimal (a 1.8% increase this year; ~12% since 2020) and management is likely to prioritize network investment and deleveraging over sizable payout growth, making Verizon a potentially attractive near-term income play but a limited source of inflation-beating income for long-term investors.

Analysis

Verizon raised its dividend for the 19th consecutive year to a 6.6% yield and CEO Daniel Schulman called the payout "sacrosanct," yet the most recent increase was only $0.0125 per share (1.8% year-over-year), and dividend growth has been roughly 12% since 2020—well below cumulative inflation. The company generated $134.8 billion of revenue in 2024 and serves 146.1 million wireless retail connections, but has lost roughly 30% market share since 2017 and is now the No. 3 carrier after reporting a loss of 7,000 postpaid phone customers in the latest quarter.

Operationally there are constructive signs: 306,000 broadband net adds in the quarter (13.2 million broadband subscribers total), $7.0 billion of free cash flow in Q3 (a 17% YoY increase and industry record), and $9.4 billion of debt reduction over the past year. Management has also implemented workforce reductions (13,000 jobs) and leadership change to accelerate a turnaround, signaling a prioritization of network investment and deleveraging over large dividend increases.

The dividend appears covered in the near term—next-quarter dividends of $0.69 on 4.22 billion shares imply a $2.92 billion payout, under half of recent quarterly operating cash flow—so a cut seems unlikely if current cash flow holds. However, sustained dividend growth sufficient to outpace inflation is unlikely while Verizon reallocates capital to regain market share and reduce leverage, making the stock more suited to income-focused, shorter-horizon investors than to those seeking inflation-beating dividend growth.

Key Decisions for Investors

• Allocate only a modest, income-oriented position if you need current yield—6.6% is attractive but treat exposure as a short- to medium-term income play rather than a long-term inflation hedge
• Do not rely on sizeable dividend growth; expect low single-digit annual increases while management prioritizes turnaround and debt reduction, so underweight the stock in dividend-growth portfolios
• Monitor three primary KPIs before increasing exposure: quarterly free cash flow relative to dividend payout, broadband net adds/subscriber trends, and pace of debt reduction versus capex needs
• Use phased purchases or hedges and set clear stop-trim triggers tied to continued market share erosion or a material deterioration in cash-flow coverage of the dividend