Verizon Communications (NYSE:VZ) and Vodafone (NASDAQ:VOD) will receive a substantial dividend from their U.S. cellular joint venture.
Verizon Wireless announced on Monday that it will pay its parent companies a $8.5 billion dividend in December. It follows a $10 billion dividend paid to its owners in last year, Bloomberg noted.
Shares of Vodafone fell more than 3% in Tuesday morning trading in New York, while Verizon Communications slipped fractionally.
The dividend, though smaller than last year’s payout, is higher than the $7.5 billion that most analysts were expected. Verizon Wireless posted third quarter margins that surpassed Wall Street forecasts on rising smartphone sales. The wireless service provider competes with rivals AT&T (NYSE:T) and Sprint (NYSE:S).
Last year’s dividend was the first cash payment made by Verizon Wireless since 2005.
Vodafone owns 45% of Verizon Wireless, with Verizon Communications accounting for the remaining 55% stake. Vodafone will receive about $3.83 billion, based on its ownership stake in the joint venture.
Once the dividend is received, Vodafone indicated that it would repurchase $2.4 billion in shares. Verizon did not indicate its plans for the dividend payment.