I view Verizon as a Telcom utility, where you expect steady cash dividend and some stock price growth. The stock price is a big disappointment for the last few years. It is my failure to understand that VZ is a free cash flow story and a big 5G investment cycle, and coming out of very low interest rate, etc. or at least I should have sold out when Buffett sold. ( Luckily, it is a 3% position, btw most of my position are around that range at least when I start and rarely I start with higher % or add to it ) . Here is the stock price performance…
Anyways here is some color on the capital expense
| 5 yr Trend | 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|---|
| 12/31/2018 | 12/31/2019 | 12/31/2020 | 12/31/2021 | 12/31/2022 | |
| Net Income | 16,039 | 19,788 | 18,348 | 22,618 | 21,748 |
| Depreciation/Depletion | 17,403 | 16,682 | 16,720 | 16,206 | 17,099 |
| Total Cash from Operations | 34,339 | 35,746 | 41,768 | 39,539 | 37,141 |
| Purchase of Fixed Assets | -16,658 | -17,939 | -18,192 | -20,286 | -23,087 |
| Purchase/Acq of Intangibles | -1,429 | -898 | -2,126 | -47,596 | -3,653 |
| Capital Expenditures | -18,087 | -18,837 | -20,318 | -67,882 | -26,740 |
The big number on 2021 is their 5G Spectrum purchase. The rise you are seeing recently is post earnings move-up. So what did we hear from the earnings that is causing the stock to rally…
From 3Q prepared remarks
We now expect 2023 capital spending to be at the higher end of the previously guided range of $18.25 billion to $19.25 billion.
From call transcripts
Obviously, we’re not going to guide on 2024 at this time, but I can share some qualitative aspects as we look ahead to free cash flow for 2024. On the plus side, we continue to focus the team on an improving EBITDA profile, and that’s the focus of the team. With respect to CapEx, we said a couple of times here in the past that we expect to run at $17 billion to $17.5 billion for 2024, which is back to a business as usual level of spend
that you’ve seen from us
So the cap-ex is reverting to 2018-2019 range, will the company use excess cash to retire debt vs use it to buyback needs to be seen.
EPS - $4.97
PE - 7.25
dividend yield 7.4% ($2.66 per year; and 60% of FCF); expect dividend to go up by 0.05