The dividend stock yields 6.6% -- but is it too risky?
Verizon's Q3 earnings report led to a price dip, presenting a buying opportunity despite limited near-term upside due to the Frontier Communications deal. Market overreaction was driven by increased debt and missed revenue estimates, though Verizon's dividend safety remains strong with a low payout ratio of 46.7%. Verizon's dividend remains safe with a low payout ratio of 46.7%, making it an attractive income play despite recent declines in earnings and cash flow.
The telecom giant has a vast amount of unused fiber-optic infrastructure. With the AI revolution, it likely won't stay unused for long.
Verizon (VZ) has received quite a bit of attention from Zacks.com users lately. Therefore, it is wise to be aware of the facts that can impact the stock's prospects.
Verizon's financial performance remains weak despite a recent dividend hike, with Q3'24 revenues down 0.1% and EPS declining to $1.19. The wireless company has spent heavily on capex, 5G spectrum and acquisitions, yet the spending hasn't translated into revenue growth. The stock has a large dividend yield of 6.55%, but ongoing high debt levels and limited growth potential pose significant risks for investors.
The stock carries an attractive 6.5% yield.
The telecom giant appears to be in a strong position to extend its streak of 18 consecutive dividend increases.
VZ remains a compelling Buy due to its increasingly richer dividend yields, thanks to the market's overreaction to the top-line FQ3'24 miss. The telecom's core wireless services segment continues to perform well, with stable gross margins and increasing ARPA, as myPlan grows in popularity. VZ's reiterated forward guidance and raised consensus estimates imply continued top and bottom-line expansion, with it supporting the safe dividend investment thesis.
Verizon's stock has shown bullish stabilization post-2023 trough, but still underperforms YTD compared to the S&P 500, suggesting potential gains through mean reversion strategies. Mixed earnings report: EPS beat estimates but declined YoY; revenue missed estimates; significant net income drop due to competitive pressures and operational reorganization. Strong wireless subscriber growth, yet high-interest rates impact equipment sales; 2025 guidance indicates increased capital spending and modest EBITDA and revenue growth.
The company will be buffeted by some strong, oncoming headwinds, one pundit believes.
Keybanc Captial Markets analyst Brandon Nispel downgraded Verizon Communications Inc VZ stock from Overweight to Sector Weight.
We reiterate our Buy rating on Verizon Communications Inc. stock despite mixed Q3 results. Verizon missed some of our key expectations, but wireless growth and broadband additions remained robust, with notable success in fixed wireless. VZ's operating income and adjusted EBITDA are impacted by AI.