6. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 57
Verizon Communications Inc. (NYSE:VZ) is one of the largest companies in the telecom sector. The company offers services in communications, technology, information, and entertainment. In 2023, the company faced challenges in its consumer business, gaining wireless subscribers at a slower pace than its peers. Its smaller consumer wireline segment, which offers broadband services, also experienced stagnation, largely due to a competitive promotional landscape. In addition, macroeconomic pressures hindered the growth of its business wireless and wireline divisions as companies scaled back spending on telecom upgrades. However, during the first nine months of 2024, Verizon’s consumer revenue increased by 0.9% year over year, while business revenue declined by 2.1%, resulting in overall revenue growth of 0.3%. The recovery in the consumer segment was driven by localized incentives and marketing, and the completion of its strategic plans, which also includes its latest acquisitions.
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.”
In the third quarter of 2024, Verizon Communications Inc. (NYSE:VZ) posted revenue of $33.3 billion, showing a slight decline of 0.1% compared to the same period the previous year. Wireless revenue rose to $19.8 billion, representing a 2.7% increase year-over-year. Moreover, the company recorded 389,000 net broadband additions, continuing its streak of over 375,000 net additions for the ninth consecutive quarter.
Verizon Communications Inc. (NYSE:VZ) boasts a robust cash position, solidifying its reputation as a dependable dividend payer. During the first nine months of the year, the company generated $26.5 billion in operating cash flow and reported a free cash flow of $14.5 billion. With 18 consecutive years of dividend growth, Verizon has demonstrated its commitment to rewarding shareholders. On December 5, the company announced a quarterly dividend of $0.6775 per share, unchanged from the previous payout. The stock supports a dividend yield of 6.78%, as of December 19.
Of the 900 hedge funds tracked by Insider Monkey at the end of Q3 2024, 57 funds held stakes in Verizon Communications Inc. (NYSE:VZ), compared with 67 in the previous quarter. These stakes have a consolidated value of more than $3.2 billion.
