-
Pfizer Inc. (PFE)
-
Philip Morris International Inc (PM)
-
Verizon Communications Inc. (VZ)
-
Restaurant Brands International Inc. (QSR)
I am down 25% with Verizon. As an income investor, should I just hang on and collect dividends as I wait for the turnaround or sell, take the hit and get something else?
Stanley
VZ is a legacy telecom company and is now trading at 7.5x times' Forward P/E. Revenue has been quite flat over the years despite a ramp up in capital spending. The balance sheet is leveraged, with net debt of around $184B. Net debt to EBITDA is around 3.4x, the high end of historical averages (ranging from 2.2x- 3.4x). Dividend payments have been quite stable and have been gradually increasing over the years. The US telecom industry’s competition has been quite intense over the years, which requires significant capital investments without commensurate returns, and this has kept returns from the stock low. We would consider OK generally, because it is priced right. But we would consider PM, QSR, PFE to be 'better' overall and would be OK with a switch.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in VZ.