Verizon (NYSE: VZ) is considered one of the more reliable mobile networks in the United States with the best 4G coverage. It trails behind T-Mobile (Nasdaq: TMUS) and AT&T (NYSE: T) in 5G coverage.

Verizon is a massive company with more than 130,000 employees around the world.

How massive? Over each of the past two years, the telecommunications giant delivered more than $20 billion in free cash flow.

This year, free cash flow is forecast to drop significantly to $17.9 billion from $25.2 billion in 2020.

We don’t like to see that. But in Verizon’s case, it’s not too problematic.

That’s because the company is forecast to pay shareholders $10.5 billion in dividends this year. That makes a very comfortable payout ratio of 59%.

I like to see a payout ratio of 75% or below. That means even if a company has a rough year or two, it should be able to sustain its dividend.

Verizon has raised its dividend every year for 15 years straight. It has historically done so in the third quarter.

Despite its falling free cash flow this year, Verizon still has plenty of cash flow to not only pay the dividend but also raise it for a 16th consecutive year. I am confident it will do so.

Verizon’s free cash flow is projected to rise to $18.3 billion in 2022. That’s still well below 2020’s figure, but it’s an improvement over this year’s forecast.

Should free cash flow slip again next year, we’ll have to take a closer look at the company’s ability to pay its dividend.

But as of right now, considering Verizon’s low payout ratio and strong dividend-raising track record, the dividend is very safe.

Dividend Safety Rating: A