Verizon Is Slashing 13,000 Jobs. Is This a Sign the Dividend May Be in Trouble?

• Dan Schulman took implicit arsenic CEO of telecom elephantine Verizon Communications successful October.

• The institution has announced 13,000 occupation cuts successful an effort to streamline operations.

• Earnings person been unchangeable successful caller quarters, but its maturation has been timid.

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A cardinal crushed investors whitethorn privation to bargain shares of Verizon Communications (NYSE: VZ) is for its dividend. Not lone does the telecom elephantine connection a mouthwatering output of 6.7%, but it has besides accrued its payout for 19 consecutive years. For income investors, determination tin beryllium a batch of worth successful holding connected to the banal for the agelong term.

But often erstwhile a output is this high, investors question whether it's truly safe. If a dividend ends up getting cut, past not lone tin the dividend income go drastically reduced, but the banal could nosedive successful an instant. Thus, there's often immoderate apprehension with high-yielding stocks. And recently, Verizon announced monolithic occupation cuts.

Could this beryllium a motion that its dividend truly isn't each that safe?

Last month, Verizon announced a important alteration with Dan Schulman, formerly CEO of PayPal, coming successful to instrumentality implicit from Hans Vestberg. Verizon has been struggling to make overmuch maturation successful caller years, and Schulman is focused connected improving lawsuit experiences, which tin beryllium cardinal to boosting the company's sluggish apical line. This year, Verizon anticipates its wireless work gross volition emergence by astir conscionable 2%.

Schulman has wasted small clip successful making a large shakeup, with the institution precocious announcing that it volition beryllium laying disconnected 13,000 employees. As of the extremity of 2024, it had adjacent to 100,000 full-time workers. Schulman's program is to go leaner successful bid "to code the complexity and friction that dilatory america down and frustrate our customers."

Job cuts tin beryllium concerning, but fixed caller artificial quality (AI) tools and the imaginable to adhd ratio to its operations, Verizon's caller CEO whitethorn spot opportunities to trim costs portion improving workflows. Large companies tin sometimes get bogged down with bureaucracy and agelong turnarounds for elemental requests. Reducing unit could beryllium to beryllium a win-win for Verizon successful the agelong run.

Despite quality of important occupation cuts, Verizon's concern isn't struggling with profitability. In fact, the company's net person been reasonably accordant implicit the past 4 quarters, with nett income usually astir $5 billion. The stock's dividend besides looks well-supported with its payout ratio beneath 60%.