1. Verizon Communications Inc. (NYSE:VZ)
Dividend Yield as of January 6: 6.79%
Verizon Communications Inc. (NYSE:VZ) is a New York-based telecommunications company that offers services in communications, technology, information, and entertainment. The company is appealing to income investors due to its strong financial foundation, reinforcing its status as a reliable dividend payer. In 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. With 18 consecutive years of dividend increases, Verizon continues to prioritize delivering value to its shareholders. It offers a quarterly dividend of $0.6775 per share and has a dividend yield of 6.79%, as recorded on January 6.
In 2023, Verizon Communications Inc. (NYSE:VZ) faced difficulties in its consumer business, with wireless subscriber growth lagging behind its competitors. Its smaller consumer wireline segment, which provides broadband services, also saw limited growth, primarily due to a competitive promotional environment. In addition, macroeconomic challenges affected the growth of its business wireless and wireline sectors, as companies reduced spending on telecom upgrades. However, in the first nine months of 2024, the company’s consumer revenue grew by 0.9% year over year, while business revenue dropped by 2.1%, leading to overall revenue growth of 0.3%. The recovery in the consumer segment was driven by targeted incentives and marketing efforts, alongside the completion of its strategic initiatives, including 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.”
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 best dividend stocks for an early retirement portfolio. 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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