Verizon Wireless (NYSE:VZ) will pay an $8.5 billion dividend to parent companies Verizon Communications and Vodafone, the second straight dividend payment the carrier has produced after years of not doing so.
Analysts and investors have been eagerly awaiting such a payment, which Verizon confirmed in a brief statement on its site. The dividend will be paid by Dec. 31 and will be distributed based on the parent companies' ownership stakes. Verizon Communications owns 55 percent and Vodafone owns 45 percent of the venture.
The payment is less than the $10 billion payment Verizon Wireless distributed in January, which was the first time the carrier had paid out a dividend since 2005. However the $8.5 billion payment was higher than some investors had expected, according to Bloomberg.
Interestingly, Verizon Communications CEO Lowell McAdam said last year after the announcement was made about the $10 billion payment that Verizon Wireless would not automatically pay a dividend every year, but that the payment would be decided on an annual basis. The dividend had been suspended while Verizon Wireless worked to pay down its debt.
"Verizon is probably feeling like they are on firm ground, and this is a show of confidence predicated on better business momentum," HighMark Capital Management fund manager Todd Lowenstein told Bloomberg.
Verizon Communications CFO Fran Shammo said at an investor conference earlier this month that Verizon would be a willing buyer of Vodafone's stake, if the price was right. However, analysts and investors have often discounted such a move given the likely huge size of such a deal.
- see this WSJ article (sub. req.)
- see this Bloomberg article
- see this Reuters article
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