Consistent High Yield Stock #2: Verizon Communications Inc. (NYSE:VZ)
Verizon is the leader in the United States wireless industry. Verizon controls 34% of the wireless market in the U.S. -AT&T (T) controls another 31%.
The excellent economics of the heavily regulated wireless industry have already been discussed above.
Warren Buffett has taken notice. AT&T and Verizon are two of Warren Buffett’s highest yielding dividend holdings.
Verizon stock currently offers investors a healthy 4.5% dividend yield.
Verizon has a long dividend streak of its own. The company has paid steady or increasing dividends every year since 1984.
Where Verizon distances itself from AT&T is its better growth prospects.
Verizon closed a variety of deals in 2015 to position itself for future growth.
The company is selling its wireline assets in California, Florida, and Texas to Frontier Communications (FTR) for $10.5 billion.
Verizon Communications Inc. (NYSE:VZ) is leasing the rights to over 11,300 of its company owned towers to American Tower Corporation (AMT) and selling American Tower Corporation 130 towers for an upfront payment of $5 billion
Verizon also acquired AOL, Inc. (NYSE:AOL) & Millennial Media, Inc. (NYSE:MM) to focus on content distribution and advertising. This move will likely have the greatest long-term effect on Verizon’s growth.
The company recently released its Hum automotive device and its Go90 mobile content service. The Go90 mobile content service.
Verizon is the gatekeeper between l internet access and your mobile phone. The company is seeking better ways to monetize this potentially lucrative position.
The Go90 mobile content service is free for everyone. Verizon is monetizing it with advertising. Verizon is being accused of violating net neutrality because it is not charging its customers for data overages while using Go90. Verizon wants to attract as much viewership as possible to its mobile streaming.
The company is targeting millennials in its long term mobile content play. The app focuses on sports, concerts, and popular web articles from the AOL acquisition.
In addition to its intelligent strategic moves, Verizon is seeing strong growth in its wireless segment.
The company is benefiting as consumers use increasing amounts of data on their smart phones and tablets. The trend toward more data has given Verizon a 7.5% earnings-per-share growth rate over the last several years.
Investors in Verizon should expect total returns of ~12% a year from the company. Total returns will come from dividends (~4.5%) and earnings-per-share growth (~7.5%).
Verizon Communications Inc. (NYSE:VZ) appears undervalued at this time relative to its total return prospects. The company has a price-to-earnings ratio of just 12.6.
Verizon’s mix of value, high yield, stability, and growth make the company a favorite of The 8 Rules of Dividend Investing.
A total of 59 funds from the Insider Monkey database reported long positions in Verizon as of the end of September, versus 62 funds a quarter earlier. Michael Messner’s Seminole Capital reported a stake in Verizon in its 13F filing for the fourth quarter, disclosing ownership of 2.65 million shares as of the end of December.
Follow Verizon Communications Inc (NYSE:VZ)
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Consistent High Yield Stock #3: Philip Morris International Inc. (NYSE:PM)
Philip Morris International Inc. (NYSE:PM) is the largest tobacco company in the world based on its $139 billion market cap. Philip Morris has 28.7% global cigarette market share (excluding the United States & China).
The company sells tobacco products internationally. The company’s strongest brand is Marlboro. Philip Morris’ sister company Altria (MO) sells the same products in the United States.
Philip Morris stock has a high dividend yield of 4.5%. High dividend yields are nothing new to Philip Morris shareholders. The company’s stock’s average dividend yield since it was created is 4.4%.
