10 Best Blue Chip Dividend Stocks To Buy

5. Verizon Communications Inc. (NYSE:VZ)

Number of Hedge Fund Holders: 67

Verizon Communications Inc. (NYSE:VZ) is a New York-based telecommunications company that provides services related to technology, communications, information, and entertainment. On June 5, the company declared a quarterly dividend of $0.665 per share, which fell in line with its previous dividend. Overall, it has been growing its dividends for 17 consecutive years, which makes VZ one of the best dividend stocks on our list. As of July 7, the stock has a dividend yield of 6.45%.

Recently, Goldman Sachs initiated its coverage of Verizon Communications Inc. (NYSE:VZ) and maintained a Buy rating on the stock as a part of its broader coverage initiation on the US Telecom Services and Infrastructure sector. According to the firm, the U.S. telecom industry is undergoing a transformation, with operators now concentrating on their core businesses after a period of operating as conglomerates that led to shareholder capital losses. The firm believes that the company will achieve steady growth in revenue, EBITDA, and free cash flow over the next 18 months. The signs of this growth can already be seen in the company’s Q1 2024 earnings. It generated revenue of roughly $33 billion, which showed a slight increase of 0.21% from the same period last year. Moreover, its cash flow for the quarter also jumped from $2.3 billion to $2.7 billion.

In the most recent quarter, Verizon Communications Inc. (NYSE:VZ) also showed strength in its core wireless business. Total wireless revenues grew by 3.3% YoY to $19.5 billion and fixed wireless revenue also showed an increase of $197 million from the prior year period to $452 million. The company’s fixed wireless subscriber base is also growing quickly, and its network is widely regarded as the best in the industry. According to analysts, the company is all set to achieve a net increase in phone subscribers over the next two years.

One drawback to Verizon’s otherwise strong balance sheet is its significant debt load. Verizon Communications Inc. (NYSE:VZ) has amassed over $180 billion in total debt. With a payout ratio of 60%, the company allocates over half of its earnings to dividends, leaving limited funds available for debt repayment. Additionally, Verizon’s forward P/E ratio of 8.97 indicates that the stock is trading at nearly nine times its expected future earnings, suggesting the market has concerns about its financial flexibility given the high debt levels.

The number of hedge funds tracked by Insider Monkey owning stakes in Verizon Communications Inc. (NYSE:VZ) grew to 67 in Q1 2024, from 63 in the previous quarter. These stakes are collectively valued at over $2.1 billion. With nearly 9 million shares, Citadel Investment Group was the company’s leading stakeholder in Q1.