March 15, 2013 at 13:29 PM EDT
Bank of America Merrill Lynch Says AT&T Could Help a Verizon/Vodafone Deal (VZ, T, VOD)

Verizon Communication’s (VZ) desire to purchase Vodafone’s (VOD) stake in Verizon Wireless could be fulfilled if AT&T (T) joins the discussion to purchase Vodafone’s non-US assets, said a Bank of American Merrill Lynch analyst on Friday.

According to BofA Merill analyst David Barden, in this scenario Verizon would acquire Vodafone outright if AT&T gets in the picture to purchase Vodafone’s global assets.

Since October, Verizon and Vodafone have been in talks about a potential merger, full acquisition, or a buyout of Verizon Wireless. However, Verizon does not have any interest in buying all of England-based Vodafone’s assets, so a full acquisition would be unlikely.

AT&T, on the other hand, does have a desire to increase its global presence, so purchasing Vodafone’s non-US assets may be in its best interests, said Barden. While a three-way deal might take awhile, it would allow Verizon to get full control of Verizon Wireless, Vodafone to get a premium for its portfolio, and AT&T to be able to expand its outreach.

Bank of American maintains a “Neutral” rating on VZ and now see shares reaching $50, up from the previous target of $45. This target suggests a 3% upside to Thursday’s closing price of $48.48.

The Bottom Line
Shares of Verizon (VZ) have a dividend yield of 4.30% based on Friday’s intraday trading price of $47.96 and the company’s annualized dividend payout of $2.06 per share. Shares of AT&T (T) have a dividend yield of 4.94% based on Friday’s intraday trading price of $36.42 and the company’s annualized dividend payout of $1.80 per share. Shares of Vodafone (VOD) have a dividend yield of 3.68% based on Friday’s price of $27.75 and the company’s annualized dividend payout of $1.02 per share.

Verizon (VZ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars. AT&T (T) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars. Vodafone Group (VOD) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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