1. Verizon Communications Inc. (NYSE:VZ)
Dividend Yield as of January 16: 7.12%
Verizon Communications Inc. (NYSE:VZ) is an American multinational telecommunication company. It is undergoing a major shift within the telecommunications sector. Sales from traditional sources like mobile devices are declining, as consumers prefer purchasing directly from brands. On the business side, the demand for networking equipment has dropped, largely due to the diminishing importance of old-fashioned landline phone services. This is happening in a highly competitive environment, where rivals are taking bold steps with pricing strategies. In the past 12 months, the stock has declined by nearly 2.5%.
That said, in the first nine months of 2024, Verizon Communications Inc. (NYSE:VZ)’s consumer revenue increased by 0.9% compared to the previous year, while business revenue fell by 2.1%, resulting in overall revenue growth of 0.3%. The consumer segment’s recovery was fueled by focused incentives and marketing campaigns, as well as the successful execution of its strategic initiatives, such as recent 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.”
Verizon Communications Inc. (NYSE:VZ) also attracts income investors thanks to its solid financial position, which supports its reputation as a dependable dividend payer. In the first nine months of FY24, the company generated $26.5 billion in operating cash flow and $14.5 billion in free cash flow. With 18 years of consecutive dividend hikes, Verizon remains focused on providing value to its shareholders, offering a quarterly dividend of $0.6775 per share. It offers a dividend yield of 7.12%, as of January 16.
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. With nearly 25 million shares, GQG Partners was the company’s largest stakeholder in Q3.
Overall, Verizon Communications Inc. (NYSE:VZ) ranks first on our list of the highest yielding dividend stocks in the Dow. 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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