1. Verizon Communications Inc. (NYSE:VZ)
Dividend Yield as of December 17: 6.62%
Verizon Communications Inc. (NYSE:VZ) is a 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, a marginal decrease of 0.02% compared to the same period last year. Wireless revenue reached $19.8 billion, reflecting a 2.7% year-over-year increase. Moreover, the company achieved 389,000 net broadband additions, marking the ninth consecutive quarter with more than 375,000 net additions in broadband.
Verizon Communications Inc. (NYSE:VZ) is pursuing the acquisition of Frontier as part of its strategy to strengthen its position in the expanding fiber-optic internet market. The company views fiber as a critical growth area for the future. If Verizon can make Frontier’s operations profitable, the acquisition could be advantageous in the long run, as customers who use both Verizon’s mobile and internet services are generally more loyal and less likely to switch providers.
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 a strong cash position, making it a reliable dividend payer. In the first nine months of the year, the company generated $26.5 billion in operating cash flow, with free cash flow totaling $14.5 billion. It has a solid track record of 18 years of consistent dividend growth. On December 5, Verizon declared a quarterly dividend of $0.6775 per share, maintaining the same amount as the previous dividend. The stock’s dividend yield on December 17 came in at 6.62%.
According to Insider Monkey’s database of Q3 2024, 57 hedge funds owned stakes in Verizon Communications Inc. (NYSE:VZ), down from 67 in the previous quarter. These stakes have a collective value of more than $3.2 billion.
Overall, Verizon Communications Inc. (NYSE:VZ) ranks first on our list of the best Dogs of the Dow dividend stocks. While we acknowledge the potential for VZ to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than VZ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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