On April 6, Verizon announced that it has entered into an agreement to purchase an approximate 24.5% stake in AwesomenessTV [ATV]. Upon completion of this transaction, the ATV multi-platform media company will be valued at approximately $650 million. Dreamworks Animation Skg Inc (NASDAQ:DWA), which acquired ATV in 2013, will remain the company’s majority stakeholder with an approximate 51% ownership of outstanding shares, while Hearst will own the remaining 24.5%. ATV is a producer and distributor of short-form digital entertainment content for teen audiences and got its start as a content provider for YouTube. ATV was also one of the original content partners when Verizon launched its go90 wireless video service last year.
Furthermore, on the first-quarter conference call, CFO Fran Shammo said that the company remains confident in its three-tier strategy for long-term growth. That is to:
1. Lead at the network connectivity level in the markets Verizon serves
2. Develop new business models through global platforms in video and Internet of Things
3. Create incremental revenue opportunities in applications and content.
According to Mr. Shammo, regarding progress on this multi-tier strategy the company is focused on network leadership and operating efficiency, while it develops new ecosystems in video and the Internet of Things, leveraging its capabilities in the United States and scaling its platforms globally.
Verizon is also developing a portfolio of unique content targeted at the Millennial Generation so that it can capitalize on the opportunity transforming mobile. At the network connectivity layer the company consistently invest in its 4G LTE network to accommodate growth in data usage and enable customers to experience an unmatched level of connectivity. National studies continue to recognize Verizon as the overall 4G LTE network performance leader.
Source: 1Q 2016 Presentation
Verizon’s High Dividend
In September 2015, Verizon’s board approved a 2.7% dividend increase which raises its annualized dividend to $2.26 per share.
This was the ninth consecutive year that its board approved a dividend increase, affirming their confidence in the strength of their future cash flows. Verizon has been paying uninterrupted dividends since 1983. The forward annual dividend yield is high at 4.5% and the payout ratio is at 50.9%.
The annual rate of dividend growth over the past three years was at 3.4%, over the past five years was at 3.0%, and over the last ten years was at 3.2%.
Source: company’s reports *assuming same dividend rate for the year
Verizon did not buy back shares in the first quarter of 2016. However, it repurchased $5.1 billion of its stock in 2015.
