Best Dow Jones Stocks to Buy: Verizon Communications Inc. (VZ)
When looking for stocks to buy, sometimes its best to start on the bottom.
In the Dow Jones, that would bring us to Verizon Communications Inc. (NYSE:VZ). The nation’s largest telecommunications company is down double digits in 2017 as it has seen a loss in subscribers. The company is investing heavily in 5G technology, which could be just the right step in a never-ending battle for being the best phone company for customers.
Verizon beat out rival AT&T Inc. (NYSE:T) in a bidding war for Straight Path, a holding company of spectrum. The deal gives Verizon a huge advantage in the race to 5G network development. Straight Path was worth only $400 million months ago, before causing the two largest U.S. phone companies to finally decide $3 billion was the value of the assets it held.
With the deal, VZ gets Straight Path’s huge wave spectrum in the 28 GHz and 39 GHz millimeter levels. The spectrum is used for mobile communications and believed to help faster connections for downloads and powering the newest connected devices, like self-driving cars.
Verizon has been making many moves in the market of expanding its 5G capabilities. Deals brought it fiber optics supplies from Corning Incorporated (NYSE:GLW) and Prysmian Group, and also a $1.8 billion deal to acquire XO Communications outright.
Back in May, rival T-Mobile US Inc (NASDAQ:TMUS) said it would be the first in the nation to build a 5G network, with a planned 2020 national rollout. T-Mobile paid $8 billion in a Federal Communications Commission auction to get spectrum towards its 5G plans. VZ sat out this auction and according to analysts, didn’t need the spectrum. T-Mobile, which has been gaining subscribers from other phone companies, will have an advantage if it can get the 5G market first. Verizon may be close behind, with trials already happening and now an impressive library of assets to create its national presence.
In 2016, Verizon saw EPS fall to $3.87. Revenue of $126 billion was down 4.3% from the prior year. The first quarter continued this trend with a 4.5% drop in revenue as the company continued to lose subscribers. Gaining a foothold in 5G to win customers as a fast connector go a long ways in minimizing losses or maintaining subscriber figures.
VZ shares sit near their 52-week lows. With the drop in 2017, shares currently yield just north of 5%, making this one of the top yielding stocks in the Dow Jones. Verizon has seen revenue fall, but moves in 5G and strengthening its media library (AOL, Yahoo! Inc. (NASDAQ:YHOO)), could be the right recipe to see the stock rebound in the latter half of 2017. Verizon remains on the list of stocks to buy from the Dow Jones.