Verizon stock is currently at a ten-year low, which means there are a lot of pi---d shareholders. Since the leadership is incapable of making any moves (other than layoffs) that would improve our standing, they have to resort to cheap tricks to keep shareholders placated. Enter the dividend rise at a time when we can't afford one.
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Take a minute to also look at AT&T stock over that same timeframe…
Might take a little longer to pay down debt for sure. If we had a workable growth strategy other than wait for 5G to kick in, perhaps this wouldn't hurt so much. That said, I'm not sure we had an option. What message would that have sent it we kept it level, or reduced it? What do you think would happen to the stock price then? Our valuation means there are very few companies that could consider a takeover, but if you dropped the dividend the stock price might go low enough for that to happen. Dropping the dividend has to come with a "this will allow us to free up capital to accelerate growth" message (see AT&T); or it seen as a sign that the company is in trouble. What new growth areas is Hans going to tout?
Anyone investing in Verizon needs to realize they are investing in a utility. Thus, they are investing in a dividend yield for the long haul. The price will eventually go up again as it does with the cycles of the economy. The risk I see is that the price may go so low that it could get taken over by someone else and if it is a cash purchase then it will be as if you sold your stock at the low. Not great for those who bought high.
Indeed, the choices are binary, limited, as its one or the other, shareholders or employee layoffs. Because of market share erosions. Verizon cannot compete, as old a CLEC, with a hefty union burden, retiree burden, much the same at AT&T, also inducing layoffs, severance, effectively off payroll the end of this calendar year.