Numerous income-focused investors find appeal in Verizon Communications (VZ) shares, and it’s not hard to understand why. This telecom titan boasts a generous forward dividend yield of approximately 6.4%, making it an attractive option for investors at the current share price. Moreover, Verizon has consistently boosted its dividend for an impressive 18 years in a row.
On July 21st, the company shared its second-quarter report for the year 2025, offering additional appeal to income investors who are particularly fond of high-dividend yield stocks.
2 billion more reasons to buy Verizon
It could seem a bit salesy to put it this way, but here’s an honest take: With an additional 2 billion reasons, income investors have even more motivation to consider purchasing Verizon shares.
Verizon has raised its estimated full-year free cash flow from $17.5 billion to $18.5 billion, up to $20.5 billion. This additional $2 billion bolsters the company’s ability to maintain its dividend payments. Furthermore, this increase strengthens Verizon’s position for continuing its record of increasing dividends. If these factors don’t make Verizon an appealing choice for income-focused investors, I’m unsure what else would.
Moreover, Verizon has boosted the lower limit of its projected full-year growth rate for adjusted EPS by 1%, and also raised the lower limit of its anticipated growth rate for adjusted EBITDA by 0.5%.
Behind Verizon’s increased positivity for the remainder of the year is a combination of factors. One significant aspect is the strong performance the company demonstrated during Q2, surpassing Wall Street’s expectations for both revenue and earnings. Additionally, Verizon anticipates positive impacts from the recently implemented tax reform.
More to like than just the dividend
As a devoted investor, I can’t help but be captivated by Verizon! While its impressive dividend is certainly a major draw, there’s so much more that makes this stock appealing.
Value investors might find Verizon’s forward price-to-earnings ratio of 8.7 appealing, given that it is significantly lower than the S&P 500’s forward earnings multiple of 22.7. Moreover, this valuation is also less than what other telecom industry leaders like AT&T and T-Mobile US are currently offering.
It’s unlikely that growth investors would find Verizon appealing, but it doesn’t rule out the possibility of the company expanding. This is because Verizon CEO Hans Vestberg mentioned during the Q2 earnings call that the potential sales for AI Connect have nearly doubled to $2 billion since the launch of their AI-enabled network, cloud, and private fiber connectivity solutions portfolio earlier in 2025. I suspect this could be a significant factor fueling Verizon’s growth as AI applications shift towards network edges.
The upcoming acquisition of Frontier Communications (FYBR) by Verizon is expected to accelerate growth, according to the company’s CFO Tony Skiadis. He mentioned that they are still on schedule for a closing in early 2026, as eight states, the Federal Communications Commission, and the U.S. Department of Justice have already granted their approvals for this deal. Verizon is currently collaborating with the remaining state regulatory agencies to finalize the acquisition.
Bet on the jockey
This extra $2 billion in cash flow Verizon anticipates for this year is a result of their outstanding leadership team, making it unlikely without them. Investors relying on income can find reassurance knowing that Vestberg and other key figures prioritize what truly counts.
During the Q2 conference call, I noted that the term “discipline” was used 18 times by management to explain their strategy. At one instance, Skiadis stated, “we’re not pursuing growth merely for the sake of growth.” Vestberg emphasized that the management aims to set up the board of directors such that they can further increase the dividend payouts.
Income investors would undoubtedly appreciate such news. While Verizon has provided an additional 2 billion incentives for purchasing its stock, what makes it an attractive long-term investment might be encapsulated in the age-old saying, “Back the rider.” This emphasizes the importance of investing in a company with strong leadership and management.
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2025-07-23 12:14