Verizon (VZ 1.17%) currently offers a monster dividend. The telecom giant's yield is nearly 8%. That's among the highest in the S&P 500, where the average is around 1.5%.

An ultra-high-yielding dividend is often a warning sign that a cut could be forthcoming. However, that seems unlikely for Verizon's big-time payout. Instead of heading lower, Wall Street analysts believe the payout will continue its unstoppable rise. The company's financial metrics back that view. 

The unstoppable rise continues

Verizon has an unstoppable track record of increasing its high-yielding dividend. The company has raised its dividend payment annually for the last 16 years. That's the longest current streak in the U.S. telecom sector. 

Verizon last raised its dividend in September when it increased the payment by 2%. In commenting on the increase, CEO Hans Vestberg stated, "Our consistently disciplined approach to the market to maximize growth and profitability has again put the Verizon Board in a position to raise the dividend." 

On an increasingly solid foundation

The company currently pays $11 billion in dividends each year. It can easily afford that payout. The telecom giant has produced $18 billion in cash flow from operations through the first half of this year, enough to fund its capital expenditures ($10.1 billion) and dividend outlay ($5.5 billion) with room to spare ($2.5 billion). Free cash flow after capital expenses improved by $800 million compared to the year-ago period. Free cash flow should further expand in the second half of the year because the company's capital spending will moderate after completing a major investment into its 5G network during the first quarter. It has a clear line of sight to produce more than $17 billion in free cash this year, providing roughly $6 billion in post-dividend excess cash. 

The company's ability to generate excess free cash is allowing it to strengthen an already solid balance sheet. Verizon ended the second quarter with a 2.6 times leverage ratio (down from 2.7 times in the year-ago period). The telecom giant's improving leverage ratio supports its excellent bond ratings (A-/BBB+/Baa1).

Despite some headwinds, Wall Street expects the dividend to continue growing

Since Verizon's growing free cash flow and strong balance sheet put it in an excellent financial position, most analysts aren't worried about the potential impact of a recently emerged headwind.

Last month, a Wall Street Journal investigation found that cables laid by telecom companies years ago contain toxic lead. That caused concerns that Verizon and its peers might have to spend money to remedy the problem and cover future legal liabilities.

However, most Wall Street analysts don't see the problem impacting Verizon's ability to pay dividends. For example, Edward Jones analyst David Heger wrote to clients that the company's already "elevated" dividend yield might "indicate concern about the dividend's sustainability." However, the analyst doesn't believe the dividend is at risk. Instead, he thinks that, at worse, it "might limit Verizon's ability to increase its dividend while covering these costs." These comments suggest the analyst's belief that the payout will head higher, albeit at a modest pace, as it sorts out the lead issues. 

Meanwhile, Morgan Stanley is more bullish on Verizon's dividend. The Wall Street investment bank's analyst team has an overweight rating on the stock with a $44-per-share price target, in part because of its growth potential. In addition, its wealth management team includes Verizon in its Dividend Equity Portfolio. That focused portfolio holds 20-25 stocks with above-average dividend yields and "compelling dividend growth potential." The investment bank's teams clearly believe Verizon will continue increasing its already high-yielding dividend. 

Verizon is an attractive investment option for income seekers

Verizon pays a high-yielding dividend that it can easily fund with its growing free cash flow. While the company does face some headwinds, it has the financial strength to overcome them. That helps drive Wall Street's belief that Verizon will continue to increase its dividend. The numbers certainly back that view. That makes it a compelling stock to buy for those desiring an attractive income stream.