6. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 57
Verizon Communications Inc. (NYSE:VZ) is an American telecommunications company that offers services in communications, technology, information, and entertainment. The company is aiming to acquire Frontier as part of its strategy to enhance its position in the growing fiber-optic internet market. Verizon sees fiber as a key area for future growth. If the company can make Frontier’s operations profitable, the acquisition could prove beneficial in the long term. This is because customers who use both Verizon’s mobile and internet services tend to be more loyal and are less likely to switch providers, according to the company. Since the start of 2024, the stock has surged by more than 8%.
In the third quarter of 2024, Verizon Communications Inc. (NYSE:VZ) reported revenue of $33.3 billion, a slight decrease of 0.02% compared to the same period last year. Its wireless revenue reached $19.8 billion, reflecting a 2.7% year-over-year growth. In addition, the company achieved 389,000 net broadband additions, marking the ninth consecutive quarter with over 375,000 net additions in broadband.
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)’s cash position makes it a strong dividend payer. In the first nine months of the year, the company generated $26.5 billion in operating cash flow and its free cash flow for the period came in at $14.5 billion. It maintains an 18-year track record of consistent dividend growth. On December 5, the company declared a quarterly dividend of $0.6775 per share, which was in line with its previous dividend. The stock offers an attractive dividend yield of 6.45%, as of December 11.
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. Rajiv Jain’s GQG Partners was the company’s leading stakeholder in Q3.
