VZ Opinions?

DividendGuy · Post by **DividendGuy** » Wed Jan 05, 2011 4:03 am

Anyone invested in VZ? Anyone have opinions on the company as an investment? I bought a large number of shares near the 52 week low..and they are now sitting at the 52 week high. I'm normally more of a buy and hold guy, but I'm not sure about VZ going forward. None of my dividend growth investor brethren seem to have any interest in VZ at all. I'm thinking about cashing out after riding this iPhone wave and moving that cash into my more confident investments.

Maus · Post by **Maus** » Wed Jan 05, 2011 4:56 am

How is VZ going to sustain the dividend with EPS of $0.16? Maybe when they finally get the I-phone that'll spike, but I plan on sticking with T.
Check out this Seeking Alpha analysis of T vs. VZ (as a Dog of the Dow play):

http://seekingalpha.com/article/244305- ... qp_article

DividendGuy · Post by **DividendGuy** » Wed Jan 05, 2011 5:19 am

@Maus
I'm actually not to keen on either company, or telecoms as a whole due to falling fees and high competition. The high cost of entry as a barrier and increasing use of smart phones is what initially got me interested in T and VZ, but I felt VZ was a better value in the summer of '10 and I also felt the company had more going on with the increasing FIOS businesses and shedding of landlines (Frontier). I know T is a lot more popular in the dividend growth circle and I might get into it sometime in the future. For now, you touched on the low EPS VZ currently has. If they do announce the iPhone soon (CES) it might get a nice 5-7% pop. Fundamentally I just think VZ doesn't really fit into the dividend growth strategy I employ. I'm also concerned about the dividend payment that will eventually have to head Vodafone's way unless there is a buyout/merger.

Robert Muir · Post by **Robert Muir** » Wed Jan 05, 2011 7:46 am

I bought VZ back in July and rode it up (+40% through today) but I'm looking at it as a long-term prospect. I like the dividends and I like the prospects. I'm currently bullish on financials and INTC.

Robert Muir · Post by **Robert Muir** » Wed Jan 05, 2011 7:49 am

Frankly I'm shocked that VZ did better than my BP play. BP is up $36.5% from when I bought it back in June @$33.89. It would have been better if I'd doubled-down at $27, but that would have violated my operating principles at the time, so I regretfully passed.

dragoncar · Post by **dragoncar** » Wed Jan 05, 2011 8:04 am

Can someone explain the 238.83 P/E ratio? There must be something I'm missing.

44deagle · Post by **44deagle** » Wed Jan 05, 2011 9:22 am

They only have .16 eps, everybody seems to think they have a lot of eps share growth ahead of them thats why its priced so high.

dragoncar · Post by **dragoncar** » Wed Jan 05, 2011 10:19 am

Ok so I'm not missing anything. Unless something radical happens, aren't they just fighting for market share with AT&T, etc? What could possibly cause such explosive earnings growth? (of course, I've had similar thoughts about apple in the past so maybe I'm a good contrarian indicator)

jerry · Post by **jerry** » Wed Jan 05, 2011 4:29 pm

I bought T near the 2010 bottom and I think it has better long term prospects than VZ.

I am also considering dropping my land line soon. How many other people are thinking/doing the same thing? That trend could make or break both companies.

George the original one · Wed Jan 05, 2011 5:58 pm

To me, VZ management has shown that they can't get their act together. They show promise and then collapse, build promise again and collapse once more.
T, despite all the bad press regarding their service, at least have their finances in order and manage steady slow growth in their earnings.
T could falter, but it has a far better track record of balancing a high payout ratio than VZ does.

Robert Muir · Post by **Robert Muir** » Wed Jan 05, 2011 7:26 pm

@dragoncar "Can someone explain the 238.83 P/E ratio?"
They had some one-off expenses for Unions, health care, etc. The 12-month forward P/E is around 16-17.
I'm not sure I would buy VZ at this valuation. I jumped in when I noticed it was trading at a 52-week low ($26) and I knew it was a solid company with excellent prospects re: iPhone and Android.
T is ok, but I would wait to see if it plunges when the VZ iPhone starts selling. Obviously the VZ iPhone is already priced into T, but inst. will be keeping a close eye on the migration once VZ starts selling.

mikeBOS · Post by **mikeBOS** » Wed Jan 05, 2011 7:28 pm

@George I hear that. I worked at VZ for 2 1/2 years. After witnessing upper management's strategies trickle down through to my own managers, I'm amazed they can even get it together enough to keep the telephone poles from falling over.

Maus · Post by **Maus** » Wed Jan 05, 2011 8:17 pm

@Robert Muir

Great minds think alike. I just bought 100s INTC this morning. I like the prospect of further dividend growth.
WRT telecoms, I bought T several years ago because of the dividend yield. I won't add to my position because the future of T looks moribund, but my yield on basis justifies a continued hold position.
I was thinking of buying PEP, but the huge spike today may have taken the last bit of value out of the proposition. It has become extremely difficult to find good buys without hours and hours of research.

Robert Muir · Post by **Robert Muir** » Wed Jan 05, 2011 9:48 pm

Re: INTC - Yep, I just bought some more this morning with my 2011 Roth funds. So now INTC has my permission to take off like VZ did.

A stock to look at for either a short-term play or a long-term one is Citigroup (NYSE:C). I'm actually long-term myself, but they're poised to hit $5 soon and when they do, Institutional investors may start jumping in.

DividendGuy · Post by **DividendGuy** » Thu Jan 06, 2011 1:37 am

Just an update--
I decided to exit my position in VZ (1 day before ex-divi). I feel that I made a fair profit from the venture and don't feel it fits in my core investment thesis. For all that still have positions I wish you continued success. Thanks for all the comments everyone.

Robert Muir · Post by **Robert Muir** » Fri Jan 07, 2011 8:20 pm

Good call DG! VZ has dropped nearly 6% since you sold.
If anybody was on the fence for VZ, it's on sale!

DividendGuy · Post by **DividendGuy** » Fri Jan 07, 2011 8:42 pm

@Robert Muir
Thanks! You win some and lose some. I try to stick to fundamentals and not emotions.