Thursday, October 14, 2010

How Safe Is Verizon's Dividend?

Bernstein analyst Craig Moffett questions Verizon’s ability to maintain its current dividend level.

Verizon soon will be forced to start paying dividends to Vodafone which owns 45 percent of their Verizon Wireless joint venture.

That means diverting cash from present uses (Verizon dividends) to alternative uses (paying dividends to Vodafone).

None of that might seem too important to an end user of Verizon's services, but executives always have to balance investment in networks, marketing, dividend payments and lots of other potential uses of cash.

Less cash means harder choices, and some of those choices could reverberate in the network investment area.

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