Verizon’s 6% Yield Is Worth Holding for Years

Verizon Communications (VZ +1.11%) shares fell nearly 9% on Oct. 9, its worst day since 2002, after Space Exploration Technologies (SpaceX) acquired nationwide spectrum, setting up the prospect of a Starlink mobile service. Yet Verizon’s latest quarterly report showed a healthy business behind a dividend yielding more than 6%. Here’s why the stock looks worth holding for years.

VZ – Verizon Communications

$43.66+$0.48 (+1.11%)

NYSE · As of 4:00 PM ET 10/29/26

Verizon pays $0.7075 per share each quarter, or about $2.83 per year, yielding about 6.5% at roughly $43.50 per share on Oct. 26. The company has raised its payout for 20 consecutive years. Free cash flow — the cash left after running and upgrading the network — rose 12% to $7.8 billion in the third quarter, and management raised its full-year growth forecast to nearly 12%.

Dividend payments accounted for about 58% of free cash flow over the past year, leaving plenty of room to sustain the dividend even if Verizon experienced a soft year for results. CFO Tony Skiadas said Verizon remains “committed to growing the dividend.”

Image source: Getty Images.

Importantly, Verizon is winning phone customers on value, not promotional giveaways. CEO Dan Schulman pointed to its Simplicity plan, loyalty program, and phone-plus-home-internet bundles, which help build a loyal customer base that sticks with Verizon rather than switching to a competing carrier. “We are not buying customers. We are winning them on revenue-positive terms and keeping them longer,” he said.

Verizon added a net 406,000 customers on monthly phone plans — typically its most valuable customers — up 820% from a year earlier, and fewer customers are leaving each month.

If SpaceX launches its own service, it will get its share of the business, but it won’t control 100% of the market. The wireless carrier market is already very competitive. Leaders like AT&T and Verizon have a large retail presence, providing in-person customer service that will be difficult to dislodge.

With cash flow covering the dividend and customers staying longer, Verizon still looks like a solid long-term income investment.

John Ballard has positions in Space Exploration Technologies. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.

Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.