How to Buy Verizon Stock Now, Forecast and Dividend Guide
Verizon Communications, Inc. is the second-largest publicly traded telecom company in the United States, with more than 90 million customers. However, Verizon stock has underperformed the broader market, as it dipped slightly over the past year.
As the stock trades near its one-year lows, now should be a good time to invest in it, as analysts expect it to gain more than 10% in the upcoming months. In addition, its high and consistent dividend payouts have made the stock popular among income investors.
Verizon Communications Inc. (NYSE, Nasdaq: VZ) is one of the biggest telecommunications companies in the world, with a $224.52 billion market capitalization. Formerly known as Bell Atlantic Corp., the company merged with GTE Corp. and was renamed Verizon Communications Inc. in 2000. This Bell Atlantic – GTE transaction was valued at $52 billion. It also acquired AOL and Yahoo! in 2015 and 2017, respectively then amalgamated and rebranded as Verizon Media.
Verizon provides broadband, wireless, and wireline communications services to individual customers, businesses and governments worldwide. The company operates through two segments: Consumer and Business. With more than 91 million customers, Verizon is deemed as America’s most reliable wireless network. Moreover, it is ranked #20 in the Forbes Global 2000 2021 list.
Verizon provides broadband, wireline, and wireless connection services across the globe. Its connections include 5G, 4G LTE, Fiber Optic, and Multi Edge Compute (MEC) services. As the second-largest carrier in the United States, Verizon has approximately 94.59 million wireless retail connections and 6.78 million broadband connections as of June 30, 2021. Interestingly, Verizon telecom services are used by 99% of the Fortune 500 companies.
Verizon Stock Historical Price
Headquartered in New York City, Verizon stock is listed in the Nasdaq Global Select Market and Ney York Stock exchange. It is one of the few companies with a dual domestic listing in the United States and is also a part of the 30 companies in the Dow Jones Industrial Average.
Verizon stock price has risen 5.9% over the past five years. After adjusting for dividends, the stock has gained close to 38% since September 2016.
With a beta of 0.45, the relatively stable stock is known to offer stability from extreme market fluctuations. For example, during the pandemic-driven stock market crash , VZ stock declined 8.83% over the span of one and a half months, while the benchmark S&P 500 index fell 25.65% over this period.
Verizon stock prices hit their all-time high of $69.50 on October 4, 1999. It is currently trading 14.2% below its 52-week high of $61.95, which it hit on December 2, 2020.
Why Invest in Verizon Share? Points to Consider
Before deciding whether Verizon stock is a buy or a sell, you should look into the company’s business model, its expansion plans and more. Here are some of the aspects of the company that are important to consider.
A Leader in 5G Deployment
Verizon is currently rolling out its 5G services across the USA. It is the first company in the world to offer 5G network edge computing that has Advanced Web Services (AWS) wavelength The company is well poised to disrupt the home broadband industry through its “5G Home” Internet plan, providing uninterrupted internet services at high speeds. In addition, Verizon claims that its 5G Ultra-Wideband is designed to handle data volumes that are 100 times larger than its 4G LTE networks. Verizon wants to expand its 5G Home Internet service to 15 million households by the end of 2021 and 50 million houses by 2025. Also, it aims to expand its Ultra-Wideband service to 100 million people within the first quarter of 2022.
The company recently entered into a 10-year partnership with National Football League (NFL), whereby Verizon Communications is named NFL’s official technology partner and official 5G network. Currently, Verizon’s 5G Ultra Wideband is present in 25 NFL stadiums and 60 sports and entertainment centers in the United States.
The Verizon Financials
Should I buy Verizon stock? Another factor you should consider is the company’s financial strength. Verizon capitalized on the remote-work trend to fuel its growth over the past year. Despite the gradual reopening of global economies, Verizon stock has witnessed stable growth in its consumer base and revenues. Its total operating revenues increased 10.9% year-over-year to $33.76 billion in the fiscal second quarter ended June 30, 2021, driven by a 47.6% rise in its wireless and equipment revenues. The company’s operating income improved 10.9% from the same period last year to $8.16 billion, while net income rose 22.9% year-over-year to $5.95 billion.
However, the company’s cash flows declined in the first half of 2021, as it continued to invest heavily to accelerate its 5G rollout, along with higher cash taxes. Verizon’s declining cash flows might affect its creditworthiness, as the company has been issuing debt to finance its operations and expansions. Its levered free cash outflow stood at $28.33 billion as of June 30, 2021, while its total debt amounted to $180 billion.
Thus, Verizon stock has a debt/free cash flow ratio of negative 5.10. Continued poor cash flows are expected to exacerbate Verizon’s debt and interest burden. It currently has a Baa1 credit rating from Moody’s Investors Service, BBB+ rating from S&P Global Ratings, and A- from Fitch Ratings.
Verizon Stock and ESG Commitments
Verizon is committed to making its operations sustainable over the next few decades. It plans to achieve net-zero operational emissions by 2035. Also, the company aims to generate at least 50% of its total electricity consumption through renewable energy by 2025. To this end, Verizon has entered into 13 long-term power purchase agreements so far to generate approximately 1.7 GW of renewable energy capacity.
Verizon’s sustainability investments and initiatives have paid off, as it reduced its carbon emissions by 53% from its 2016 levels in 2019. In addition, it reduced 12 million tons of carbon emissions in 2020, aligned with its goal of reducing carbon footprint by 20 million tons by 2030.
The company has issued Verizon green bonds in multiple tranches to fund its clean energy initiative since 2019, thereby becoming the first U.S.-based telecom carrier to do so. The proceeds worth nearly $3 billion raised from such bond issuances are expected to fund its renewable energy investments. Verizon stocks have an ESG risk score of 18, indicating relatively low risks with respect to its industry peers.
Verizon faces intense competition from established telecom carriers AT&T Inc. (NYSE: T) and T-Mobile US, Inc. (Nasdaq: TMUS). AT&T, which is the largest telecom carrier in the United States, is VZ’s biggest rival. Along with a more extensive subscriber base and fundamental backing, AT&T is also a Dividend Aristocrat, and hence, is more appealing to income investors. In addition, AT&T’s connectivity and subscription services are more affordable compared to Verizon’s plans.
On the other hand, T-Mobile has successfully increased its dominance in the U.S. telecom industry by merging with Sprint Corporation last year. Through this inorganic growth, T-MUS’ 5G network currently reaches 80% of Americans across 8,300 cities. Moreover, the company is aggressively expanding its operations to reach 99%+ Americans within the next few years.
Verizon Stock Dividend Information
Is Verizon stock a buy or a sell? To answer this, you should also consider the company’s dividend payouts. Verizon is popular among income investors due to its consistent dividend payouts over the years. Verizon stock dividend price of $2.56 is paid on a quarterly basis. In fact, the company raised its quarterly dividend by 2% to 64 cents on September 2 (payable on November 1), marking its 15th consecutive year of quarterly dividend increase. If this trend continues, Verizon stock will likely attain the esteemed dividend aristocrat status within the next decade.
Verizon stock dividend yields 4.72% on the current price, which is significantly higher than the benchmark interest rates or yields on government securities. Also, Verizon’s dividend yield is 3.39 percentage points higher than the S&P 500 index’s forward yield of 1.33%.
Verizon stock’s four-year average dividend yield is 4.45%. Furthermore, the company has a payout ratio of 48.45%, indicating nearly half of its net earnings are distributed among shareholders in the form of dividends. It is currently the third-highest yielding stock within the Dow Jones Industrial Average.
Verizon Stock Forecast and Prediction
Verizon stock prices have likely bottomed out, as it is currently trading 0.7% below its 52-week low. The stock is forecasted to gain momentum after hitting its support level. Date from Tipranks suggests Verizon stock is forecast to hit $61.78 within the next 12 months, indicating a 13.92% rise from the current price levels. This median price target is based on individual price targets provided by ten analysts.
According to 12 Marketbeat analysts, Verizon stock forecast is $61.83, indicating a 14.02% potential upside. However, CNN Business has set a median price target of $60.20 for the stock based on 20 analyst forecasts, which indicate an 11.01% rise in the upcoming months.
Verizon Stock Growth Prospects
The company is poised to witness stable growth in financials in the upcoming months. Moreover, given its immense market reach and dominance in the domestic and international telecom industry, the company already has a massive subscriber base. Analysts expect VZ’s revenues to increase 5.4% year-over-year to $135.26 billion in 2021. The consensus EPS estimate of $5.31 for the ongoing year indicates an 8.4% improvement from 2020. Also, Wall Street expects the company’s revenue and EPS to rise 0.3% and 1.1% year-over-year in 2022.
Verizon’s huge bet on 5G is expected to be rewarding in the later years after the company successfully builds a nationwide commercial network. Over the short term, it is planning to invest heavily to build a robust 5G infrastructure. The company aims to spend $10 billion in capital expenditures over the next two years, out of which $2 billion to $3 billion is earmarked for 2021 itself. However, these expenses might limit Verizon’s financial growth prospects over the next few quarters.
Where Can I Buy Verizon Stock?
In order to invest in Verizon shares, you need to create a stock account with Zeal Capital Market (ZFX). Indeed, trading Verizon stocks through ZFX should allow you to maximize your returns as the platform charges no commissions on trades.
ZFX – An Efficient CFD and FX Trading Platform
With a global market presence in three continents, ZFX is a leading regulated contract for difference (CFD) trading and forex (FX) trading platform. It is managed by the Zeal Group, comprising fintech companies and regulated financial institutions. ZFX trading platform facilitates commodity trading, including gold and silver bullions, index, and stock CFDs. The major benefit of trading with ZFX is that investors can trade Verizon stock through leverage without assuming ownership.
How to Buy Verizon Stock Now
ZFX uses the MT4 platform for purchasing Verizon stock. Here’s how you can buy the stock.
Step 1: Register with ZFX
In order to trade through the platform, you need to open a trading account first. ZFX offers three types of trading accounts – Mini Trading Account, Standard STP Trading Account, and ECN Trading Account. Depending on your preference, you can open any of the following accounts with ZFX online within minutes.
Step 2: Make your First Deposit
Depositing funds into your account is the next step. You can begin your trading journey for as low as $50 if you choose a Mini trading account. For Standard STP Trading Account, a minimum $200 initial investment is required, whereas for ECN Trading Account it is $1000.
Step 3: Account Verification
After depositing the requisite funds, your ZFX account will be set up. Post document verification of your personal information, your account will be live.
Step 4: Buy Verizon stock
After opening the ZFX account in just under three minutes, you can begin trading Verizon stock CFD with ease.
Bottom Line: Should you Buy Verizon Stock?
Despite poor price performance over the past year, Verizon stock is one of the highly coveted stocks in the markets. The company’s consistent dividend payouts lead to high total shareholder returns, compensating for the poor capital gains. It is often considered as a defensive stock, given the consistent demand for telecom over this period. Thus, Verizon stock is a good investment bet at this price point.