This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Verizon Riding iPhone, Dividend Bubble

NEW YORK ( TheStreet) -- Verizon (VZ - Get Report) was slapped with a sell rating from Bernstein Research Tuesday on concerns about continued dividend growth.

As one of the darlings of the dividend crowd, Verizon shares are up 27% since its one-year low in July. Last month, Verizon raised its dividend to 48.75 cents a share, extending its streak of dividend increases to four years in a row.

But with a big payment to joint venture partner Vodafone (VOD) looming and an ongoing debate about paying down the $57.4 billion in debt on the books, Verizon has some pressing decisions to make about how it spends its cash.

The Bernstein downgrade was based on "a stretched valuation coupled with risks to its future dividend coverage," wrote analyst Craig Moffett in his research note. "In contrast," he added, "we expect AT&T (T - Get Report) to amply cover its dividend, as well as commit to regular dividend growth."

Just as sales growth attracts investors, so too does dividend growth. Without bigger and bigger piles of that sweet cash candy, investors may look elsewhere for returns.

While concerns about dividend growth are the thrust of the Bernstein report, there's also a bit of iPhone bubble in the stock that Moffett suspects may have limited upside from here.

People close to Apple (AAPL - Get Report) have assured a few highly-positioned media outlets that Verizon will be carrying the iPhone early next year. The news of a Verizon iPhone has helped add a few bucks to Verizon's valuation -- or as some say, it's priced in.

For pessimists, this can mean that Verizon has nowhere to go but down from here.

--Written by Scott Moritz in New York.

>To contact this writer, click here: Scott Moritz, or email:

To follow Scott on Twitter, go to

>To send a tip, email:

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.64 0.00%
T $39.10 0.00%
VOD $33.01 0.00%
VZ $51.32 0.00%
FB $118.57 0.00%


Chart of I:DJI
DOW 17,891.16 +117.52 0.66%
S&P 500 2,081.43 +16.13 0.78%
NASDAQ 4,817.5940 +42.2360 0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs