Verizon Wireless to Pay $8.5B Dividend to Parent Companies

by Christopher Freeburn | November 13, 2012 9:44 am

Verizon Wireless to Pay $8.5B Dividend to Parent Companies

Verizon Wireless 1 300x199 Verizon Wireless to Pay $8.5B Dividend to Parent Companies[1]Verizon Communications (NYSE:VZ[2]) and Vodafone (NASDAQ:VOD[3]) will receive a substantial dividend from their U.S. cellular joint venture[4].

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[5]) and Sprint (NYSE:S[6]).

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.

Endnotes:
  1. [Image]: http://investorplace.com/wp-content/uploads/2011/05/Verizon-Wireless-1.jpg
  2. VZ: http://studio-5.financialcontent.com/investplace/quote?Symbol=VZ
  3. VOD: http://studio-5.financialcontent.com/investplace/quote?Symbol=VOD
  4. substantial dividend from their U.S. cellular joint venture: http://www.businessweek.com/news/2012-11-12/verizon-wireless-to-pay-8-dot-5-billion-to-co-owners
  5. T: http://studio-5.financialcontent.com/investplace/quote?Symbol=T
  6. S: http://studio-5.financialcontent.com/investplace/quote?Symbol=S

Source URL: http://investorplace.com/2012/11/verizon-wireless-to-pay-8-5b-dividend-to-shareholders/
Short URL: http://invstplc.com/1ftKMuC