Why Verizon Communications is a Solid Long-Term Dividend Stock
Generally speaking, people who want high returns are recommended to choose stocks, while people who want stable revenues are recommended to choose bonds. However, it is important to note that these are very general statements, meaning that while they are true for the most part, they leave out a lot of the more nuanced possibilities that can exist in between them. For instance, people who want stable revenues without sacrificing the upward potential of stocks might want to look into dividend stocks that pay good dividends at regular intervals. Better still, dividend stocks can come in a wide range of forms from a wide range of industries, as shown by the example of Verizon Communications.
Have You Considered Verizon Communications?
Verizon Communications is a telecommunications conglomerate that is centered on the United States but boasts a multinational presence. Said conglomerate can trace its roots to the Bell System, which once held either a monopoly or a near monopoly throughout much of the United States and Canada. Due to this, the Bell System was broken up in the 1980s, thus resulting in the various companies called the Baby Bells. Some of the Baby Bells have vanished since that time for one reason or another, while others have managed to become some of the most famous names in telecommunications in their own right. In particular, it should be mentioned that Verizon Communications was once the Bell Atlantic Corporation, having chose to rename itself based on a combination of “veritas” and “horizon” following more than one merger.
Based on this, it should come as no surprise to learn that Verizon Communications is a true titan in its particular field. In fact, it can be considered the biggest of the telecommunications companies that can be found in the United States, which speaks volumes about its sheer size. As such, Verizon Communications can call upon considerable resources, which should provide interested individuals with a measure of confidence in its long-run success. Here are some of the main reasons that interested individuals should consider Verizon Communications as a dividend stock:
High Dividends That Are Becoming Higher Still
In June of 2019, Verizon Communications announced that it would be paying a quarterly dividend of 60.25 cents on its common shares, which is a very respectable number. Moreover, while Verizon Communications can’t be included in the prestigious ranks of the dividend aristocrats, it nonetheless has a record of upward movement in this regard. After all, its dividends have been increasing on a consistent basis for a dozen years and counting. Something that should be very important for dividend investors who are keeping an eye on the long run. In part, this is because an increasing dividend suggests that the leadership of a corporation has been successful at expanding its revenue streams, thus enabling it to support those increasing dividends. However, it should also be noted that increasing dividends serve to cover inflation and more, meaning that dividend investors with a focus on the long term won’t lose out by seeing the purchasing power of their dividends eaten away nibble by nibble.
Telecommunications is what one would call a mature industry. As a result, it isn’t exactly packed with easy growth opportunities. However, Verizon Communications is interesting in that it is pouring huge resources into 5G, which promises to provide faster speeds as well as bigger data capacities than ever before. Something that could enable it to gain valuable ground because of the potential applications for the Internet of Things as well as other popular concepts that are coming into existence. In other words, there is solid reason to believe that Verizon Communications won’t be moribund in the times to come but will instead continue to see improvements in its numbers, which should provide increased confidence in its future dividends. For that matter, since Verizon Communications is such a colossus in its chosen field, there is a very good chance that it will continue to benefit from mergers and acquisitions in the times to come as well, which is one more reason to be confident in its long-run prospects.
Speaking of which, it should be mentioned that interested individuals can also check out Verizon Communications’s numbers in order to get an even better idea of its performance. In particular, it should be mentioned that the corporation’s free cash flow is more than capable of sustaining its dividends, which is pretty important when free cash flow is what is used to cover dividends. This is particularly impressive because Verizon Communications’s efforts in regards to 5G are sucking down huge amounts of resources because of the investment needed, meaning that the corporation is doing very well in this regard when it has cash to spare for the dividends and more besides.
On the whole, Verizon Communications seems to be a solid choice for a dividend stock. It isn’t expected to see sudden surges in its size out of nowhere, but it is expected to be capable of continuing to expand over time, which when combined with a set of very respectable numbers, means that it can be expected to continue paying out its dividends. On top of this, size itself is something that can provide interested individuals with a measure of confidence. After all, it makes it that much more difficult for a particular corporation to fall, meaning that interested individuals should be able to see it coming when problems start popping up. Of course, this is reliant on interested individuals checking in on their investments from time to time to make sure that everything is going as smoothly as possible so that they can take corrective action if they are not. However, this is something that interested individuals should be doing anyway even if they invested in dividend stocks because things can always change over time, meaning that regular check-ups are necessary.