Verizon Communications Inc. (VZ), the second-largest U.S. phone company, raised its quarterly dividend by 3 percent to 51.5 cents a share, the sixth consecutive year of increases after wireless bills and customers rose last quarter.
The dividend is payable on Nov. 1, the New York-based company said in a statement. Increases in quarterly payout were 2.6 percent in each of the past two years.
Verizon reported a 19 percent gain in net income last quarter after heftier mobile-phone bills helped make up for sluggish growth of its land-line businesses. The shift to smartphones, which let users surf the Web and watch videos, has helped boost the size of subscribers’ phone bills.
“As the wireless industry matures, as the churn gets lower, they’re generating more cash flow,” said James Breen, an analyst with William Blair & Co. in Boston. “It makes sense that the dividend would step up in line with that. This isn’t a huge percentage.”
Verizon made about $2.6 billion in dividend payments to its 2.7 million shareholders in the first half of the year. It has about 2.9 billion shares of common stock outstanding, it said in a statement.
The shares gained 0.8 percent to $44.15 at the close in New York. They have climbed 10 percent this year.
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