Stocks on My Watch – VZ and QCOM

VZ

I’ve noticed a that VZ is not one of the dividend growth favorite of late.

1. After VZ announce the buy of Yahoo online business, VZ flunked from $55 to $46.
2. $VZ is also get teased by the colorful T-mobile CEO on twitter, JohnLegere for the service cost is so high, and buying ’90s company like AOL and Yahoo.
3. VZ might have a cash flow issue which threatening the near 5% dividend payout. There is an article that addressing VZ cash problem.

Q1 Post-paid phone net adds $TMUS +798k $S +42k$VZ -289k $T -348k

— Walt Piecyk (@WaltBTIG) May 3, 2020

But what is this that I like about $VZ?

1. Cost is high, that means they earn more for their buck. Apple selling their products at the sky high price, no problem! People still buy them. My husband is still paying $140 for his cell phone service with $VZ, I pay $150 for my TV and internet with $VZ. I can’t escape, I need the service, and my tenants and Mr.W is addicted to the TV.  Oh well… If I can’t win, I join them. LOL 🙂
2. VZ customers are loyals. I’ve been with VZ for 10 years now, and I don’t think I’d change that anytime soon. Mr.W is even worst, he’s been hooked on to VZ for over 20 years. What the??!!
3. VZ will be the one network that would get on the 5G bandwagon testing in 11 cities. That’d probably holding some of the subscriber that are threatening to leave to cheaper T-mobile or Sprint, or even pre-paid customers.

Now let’s addressing the weakness.

1. Back to @JohnLegere point – Yahoo and AOL is so ’90s. Excuse me! Yahoo and AOL is still rank #2 and #6 in the web traffic. That translate to $$$$$ no matter what you look at.
2. Empowering Negotiating power that Yahoo and AOL couldn’t have/get – well Google will deal with Verizon now for ads. Maybe, it’ll be more efficient that way
3. Speaking of efficient. What the Marissa Mayer was meant to do when she arrived at Yahoo was to make the company more profitable, lay a bunch of people off. None of that happened. Sure! VZ will probably lay 20% of the work force off merging AOL and Yahoo.
4. Stock split: Okay! This is a long shot. So, business 101: First, you buy two online business company. Second, you laid a bunch of people off to raise the stock price. Third, you spit the company out by creating another company – Yahoo-AOL. hahah!! Now you own two business. Pretending/assuming the new company will take some of the load off the dividends, so inconvenience lower the dividend without making the dividend cut, and still own the Dividend Aristocrats!!
   • If you think this is uncommon??!!, you’re dead wrong!!! Dupont ($DD) did that just a couple of years ago, and I bought into DD sell off, and made a bunch of money on CC and DD. LOL 🙂 look where they are both now!! Well over $120 combine not counting the small dividends that they are both paying. 

QCOM

Oy, Apple is sqeezing QCOM’s neck right now deciding not paying the promised $1B rebate. It’s suck to own QCOM right now. The darn thing was worthing over 80 bucks just a year ago. Yikes! But the stock is yielding almost 5% and the payout ratio at 70%. It’s frightening to own a low cash tech stock. I might consider coming in at $45.

Tim Cook knows how to play politic, I’m afraid QCOM is no match. Their debts is so high, that $45 might not hold if the legal litigation is hanging over their head. My take is they might have to settle soon before the iPhone 8 come out, that way QCOM will get a boost from iPhone 8 chips.

What do you think?