1. Verizon Communications Inc. (NYSE:VZ)
Dividend Yield as of January 21: 6.94%
Verizon Communications Inc. (NYSE:VZ) is an American multinational telecommunications company. It focuses on 5G network products that support edge computing and AI infrastructure. These products facilitate the processing and transmission of large datasets for various AI applications, including autonomous vehicles, remote surgery, and manufacturing automation.
Recently, Verizon Communications Inc. (NYSE:VZ) teamed up with NVIDIA to create an AI-powered enterprise solution. This solution allows multiple AI applications to run smoothly over its secure 5G private networks with private Mobile Edge Computing. The company is also exploring new AI-driven projects, such as network slicing and satellite connectivity, aiming to generate new revenue streams and strengthen its competitive edge.
In the first nine months of 2024, Verizon Communications Inc. (NYSE:VZ) experienced a 0.9% rise in consumer revenue compared to the previous year. However, business revenue dropped by 2.1%, resulting in a slight overall revenue growth of 0.3%. The growth in the consumer segment was largely driven by focused incentives, marketing strategies, and the successful execution of strategic initiatives, including recent acquisitions.
Third Point Management made the following comment about VZ in its Q3 2024 investor letter:
“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 maintained a strong track record of paying dividends, supported by its robust cash flow. For the first nine months of the year, the company generated $26.5 billion in operating cash flow and $14.5 billion in free cash flow. In addition, the company has been consistently increasing its dividends for 18 years in a row, rewarding its shareholders. It currently offers a quarterly dividend of $0.6775 per share and has a dividend yield of 6.94%, as of January 21.
According to Insider Monkey’s database of Q3 2024, 57 hedge funds owned investments in Verizon Communications Inc. (NYSE:VZ), worth over $3.2 billion in total. Rajiv Jain’s GQG Partners was the company’s leading stakeholder in Q3.
Overall Verizon Communications Inc. (NYSE:VZ) ranks first on our list of the best Cash App stocks that pay dividends. While we acknowledge the potential for VZ as an investment, 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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