Verizon & Chevron's Dividends in Focus: Modest Growth vs. High Yield Concerns
Verizon, the leading U.S. wireless carrier with 146.1 million accounts, and Chevron, a major oil company, have recently made headlines with their financial performances. Verizon's revenue growth is predicted to remain modest, while Chevron's dividend yield and payout ratio raise concerns.
Verizon's revenue growth is expected to stay below 3% this year and next, according to analysts. Despite investing in 5G technology, customer willingness to pay more for faster connections has not significantly increased. However, Verizon has maintained a consistent streak of annual dividend hikes, now at 19 years, and boasts the highest yield in the Dow Jones Industrial Average at 6.3%. The company has also delivered consistent bottom-line beats over the past year.
Chevron, on the other hand, has a dividend yield of 4.3% and has not cut its dividend since 1934, increasing it annually for the last 38 years. However, its payout ratio of 86% may challenge its ability to continue increasing dividends and stock buybacks. Chevron's revenue and profitability have decreased significantly in recent years due to a supply glut in the oil industry.
Merck, a pharmaceutical giant, has a dividend yield of 4.1% and a payout ratio below 50%, providing some wiggle room for margin contraction. Merck Sharp & Dohme LLC holds the patents for the cancer therapy Keytruda, with patent exclusivity expected to expire in 2028 for the original form, but additional patents for a subcutaneous version extend protection until around 2032 and 2037.
Verizon's modest revenue growth and consistent dividend hikes, along with Chevron's high dividend yield and payout ratio concerns, highlight the different financial landscapes of these two major corporations. Merck's dividend yield and patent exclusivity for Keytruda provide stability and future prospects.
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