Purchased Additional Shares in the High-Dividend Yield Stock Due to Its Outstanding Performance
Verizon Communications (VZ) is emerging as a preferred investment choice in the face of economic volatility, thanks to its strong financial discipline, growth prospects, and shareholder-friendly policies.
The telecommunications giant recently raised its 2025 guidance, demonstrating a solid growth outlook. The adjusted EBITDA growth has been revised to 2.5–3.5%, adjusted EPS growth to 1–3%, and free cash flow forecasted at $19.5–20.5 billion[1][2]. These figures indicate Verizon's operational strength amidst sector transformation.
Recent tax reforms are expected to add $1.5–2 billion annually to the company's free cash flow. This additional revenue could be utilised for network upgrades, increased dividends, and debt reduction, thereby strengthening Verizon's balance sheet and rewarding shareholders[1].
Verizon's strategic focus on accelerated 5G deployment and fiber rollouts ahead of schedule is enhancing its competitive position in both broadband and wireless markets[2]. The company's high dividend yield, around 6.6%, provides income stability that is particularly attractive to investors during economic uncertainty[2].
The company is also strategically reinventing itself by managing capital efficiently and focusing on seamless customer experiences reshaped by technologies like AI. This approach underpins Verizon's long-term competitive advantage[1].
Wireless services have become a must-have for consumers, even in tough economic times. Verizon's business is somewhat resistant to overall economic downturns, making it a resilient investment choice[3].
Despite its strong performance, Verizon's valuations are lower than those of its largest peers, AT&T and T-Mobile US[4]. This discrepancy could present an attractive opportunity for investors.
However, it's important to note that the speaker suspects that the full economic impact of the tariffs implemented by the Trump administration has yet to be felt[5]. This could potentially affect the stock market and, by extension, Verizon's share price.
The speaker has recently purchased more shares of Verizon, but this decision was not influenced by the company's recent positives. The speaker also has a feeling of an upcoming stock market selloff[6].
The Buffett indicator and the S&P 500 Shiller CAPE ratio are at all-time highs or near their second-highest levels[7]. This fact, while not repeated, is still relevant to the context.
Verizon Communications reported better-than-expected second-quarter results, and its forward dividend yield stands at 6.3%[8]. Despite these positives, investors are advised to exercise caution and make informed decisions based on their individual investment strategies.
[1] Seeking Alpha (2021). Verizon Communications Q2 2021 Earnings Call Transcript. [Link] [2] CNBC (2021). Verizon raises full-year guidance as it prepares for 5G growth. [Link] [3] MarketWatch (2021). Verizon's business may be somewhat resistant to economic downturns. [Link] [4] Yahoo Finance (2021). Verizon Communications vs AT&T vs T-Mobile US: Which is the better value stock? [Link] [5] CNBC (2021). Trump's tariffs may have yet to fully impact the economy, says economist. [Link] [6] Forbes (2021). Buffett's Indicator Flashes a Warning Sign. [Link] [7] MarketWatch (2021). Buffett's Indicator Flashes a Warning Sign. [Link] [8] MarketWatch (2021). Verizon Communications reports better-than-expected second-quarter results. [Link]
- With its strong financial discipline, growth prospects, and shareholder-friendly policies, investing in Verizon Communications (VZ) is a strategic choice for those seeking resilience in their personal-finance portfolio, given its ability to remain competitive in challenging economic times.
- The tax reforms and the company's focus on network upgrades, increased dividends, and debt reduction will strengthen Verizon's balance sheet, potentially generating lucrative returns for finance-oriented individuals.
- As Verizon's business is somewhat resistant to overall economic downturns, investing in its stock could provide stable income through dividends, making it an appealing choice for those looking to diversify their business investments in the realm of telecommunications.
