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Verizon a Safe Stock in a Dangerous Market

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Author: Douglas A. McIntyre

The stock market has become unsettling. High interest rates will not go away because inflation will not go away. Oil prices have moved toward $100 a barrel, in part because of wars in the Middle East and Ukraine. The wars themselves could grow and destabilize countries that have been at war many times before. Investors have started to look for safe havens. Because people will always need smartphones and high-speed wireless service, Verizon Communications Inc. (NYSE: VZ) has been one for years.

Verizon makes most of its money by selling wireless services. The U.S. wireless telecom market has total revenue of almost $330 billion. According to IBIS World, Verizon is the largest company in the sector, followed by AT&T and T-Mobile. Statista reports, “Verizon reported the highest wireless revenue of any major U.S. telecommunications provider in 2023, generating 107.22 billion U.S. dollars. Verizon’s rivals AT&T and T-Mobile US reported wireless revenues of 83.98 and 78.56 billion U.S. dollars respectively.”

Verizon has an extraordinarily high yield of 6.63%. It trades in a narrow range. In the past year, this has been between $30 and $43 a share. The stock is not subject to wild fluctuations. No one will get extremely rich owning the stock, but they will not end up extremely poor either. (See how safe Verizon’s dividend is.)

Verizon’s revenue in 2023 was $134 billion, which includes wireless and wireline revenue. That was down 2% year over year. On an adjusted basis, taking into account one-time items, earnings came in at $4.71 a share, compared to $5.15 a year ago. Cash flow from operations was $37.5 billion. Verizon’s outlook for 2024 was that it would be modestly higher than 2023 across most items.

Investors who want a solid stock in an uncertain market should look at Verizon’s powerful brand and its earnings, yield, and balance sheet.

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