4. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 57
Verizon Communications Inc. (NYSE:VZ) is a New York-based telecommunications company that offers services in communications, technology, information, and entertainment. In the third quarter of 2024, the company reported revenue of $33.3 billion, which fell slightly by 0.02% from the same period last year. Its total wireless revenue came in at $19.8 billion, which showed a 2.7% growth on a YoY basis. The company recorded 389,000 total broadband net additions, marking the ninth straight quarter with over 375,000 net additions in broadband.
Verizon Communications Inc. (NYSE:VZ)’s pursuit of acquiring Frontier aligns with its goal of strengthening its presence in the expanding fiber-optic internet market. The increasing demand for high-speed internet, fueled by data-intensive activities such as video conferencing and streaming, supports this strategic move. A key benefit of the acquisition would be the expansion of Verizon’s fiber network, as Frontier’s fiber-optic services span 25 states, potentially extending the company’s reach to 31 states. The stock has delivered a 9.3% return year-to-date.
Third Point Management also highlighted the company’s acquisition in its Q3 2024 investor letter. Here is what the firm said:
“While some economic activity has been showing signs of slowing, the defensive composition of the current high yield market with a high mix of higher quality credit and short duration has let the rates tailwind overwhelm such concerns. The lowest quality sectors of the market have performed best, fueled by both soft/no landing expectations, as well as two positive events in the beleaguered telecom space. Telecom/cable have been poor performers year to date due to overhang from the growth of FWA (aka “wireless cable”) and increased fiber building, however the sector re-rated materially on two deals. Second, Verizon Communications Inc. (NYSE:VZ) announced a deal to acquire Frontier Communications (FYBR), a transaction which the fund benefited from by virtue of its investment in FYBR debt. This transaction, aimed at increasing’s VZ fiber footprint, has led to broad revaluation of fiber retail networks that we think is appropriate. While we continue to expect to see FWA rapidly erode non-upgraded cable and especially copper’s share of the low-end broadband market, the VZ deal underscores the value of the higher end footprint.”
Verizon Communications Inc. (NYSE:VZ) has established itself as a reliable dividend stock, increasing its payouts annually for 18 consecutive years. So far this year, the company has generated $26.5 billion in operating cash flow, with free cash flow reaching $14.5 billion. It offers a quarterly dividend of $0.6775 per share, resulting in a compelling dividend yield of 6.37%, as of December 4.
Of the 900 hedge funds tracked by Insider Monkey at the end of Q3 2024, 57 funds owned stakes in Verizon Communications Inc. (NYSE:VZ), compared with 67 in the previous quarter. These stakes are worth over $3.2 billion in total.
