Verizon (VZ) is proving again that VZ stock is a trustworthy buy for investors looking to strengthen their portfolio with large, well-established companies that offer a decent dividend yield.
Verizon reported an impressive 9.3% increase in profit in the third quarter that beat analyst projections, as the largest U.S. wireless provider welcomed a rebound in its Fios and wireless business.
Third-quarter Verizon earnings were $1.04 per share, up from 89 cents per share a year prior vs. the Street view of $1.02 per share.
“We expect future revenue growth from mobile over-the-top video, including digital advertising, and the Internet of Things,” said Chairman and CEO Lowell McAdam.
Verizon stock was trading up 1.5% near $45.50 in Tuesday’s session, but with VZ off 6% over the last year and well off its 52-week high of $51.73, investors have an ideal entry point into snapping up shares now for long-term, reliable growth.
Verizon Earnings Catalysts
A concerted marketing effort and sales promotions for its tablets helped boost VZ’s total revenue to $33.2 billion, up from $31.6 billion in the third-quarter 2014 and above the Street view of $32.98 billion.
Last month, Verizon launched its latest promotion to compete in an increasingly noisy marketplace (where carriers are turning to data giveaways and smartphone leasing programs) by offering its own mobile-video service.
And the tablet sales are indeed boosting Verizon’s Fios business, which drew 114,000 new Internet customers and 42,000 Fios video customers. Both increases are down from the year prior, but dramatically improved over the second quarter, when Verizon reported lower Fios growth after launching a skinny bundle giving consumers a cheaper, slimmer option over the traditional cable bundle.
In another attractive feature in Verizon stock, Verizon’s price-to-earnings valuation of 19 is generally attractive compared to peers like AT&T (T) trading around 33 times earnings.
Verizon acquired AOL in June in a $4.4 billion deal that gave Verizon AOL’s exclusive video and crucial video advertising technology for mobile devices, positioning it at the forefront of competitors in a rapidly changing media landscape, where viewer habits and content preferences seem in constant flux.
With it’s new AOL assets, Verizon can now pit itself against the likes of Facebook (FB) and Alphabet’s (GOOGL, GOOG) Google when it comes to digital advertising.
Bottom Line on VZ Stock
In addition to the $4 billion AOL takeover, Verizon has also invested about $22 billion this year in spectrum licenses, giving VZ another strong foothold for future market share growth.
And having already returned more than $11 billion to shareholders in the form of dividends and share repurchases so far this year, Verizon recently increased its quarterly dividend to 56.5 cents per share from 55 cents.
The bottom line is, while Verizon stock has struggled to find its footing this year, Verizon is well positioned to compete in an ever-evolving media and telecommunications landscape, which should boost VZ stock in the long-term.
As of this writing, Rebecca McClay was long GOOG stock.
