With such a massive recurring revenue stream and resultant cash flows, Verizon has amassed a massive pile of cash of $2.5 billion. That’s about 3% of the value of the entire company, at a market capitalization of $85 billion. It's been at $10 billion just a few years ago and may even return to those levels. That cash pile is only going to grow – the company generates over $30 billion in cash per year.
Having such a large cash pile explains why the company trades at a dividend yield of 6.38%. That yield is one the highest on the market from a blue chip stock and is likely to remain either at or around a similar level going forward. Or it could be lower. I make no predictions.
So, with so much cash being generated, and with such a high dividend being paid out, what is Verizon going to do with all the extra cash?
Something really ridiculously silly, in my humble opinion.
According to a press release issued on Friday, “Verizon Communications Inc. will list its stock on the NASDAQ exchange along with its existing New York Stock Exchange listing. Verizon, whose ticker symbol is "VZ," has approximately 2.5 million share owners and approximately 2.8 billion shares of common stock outstanding. Verizon has a broad and diverse shareholder base, and we believe that the additional support provided by dual listing will benefit our current and potential investors.”
I might just contact the other 2.45 million shareholders who hold 1,100 shares and start a proxy fight.
I originally published this article at BestCashCow.