Dogs of the Dow: Why Verizon’s (VZ) High Dividend Yield Still Looks Safe

Verizon Communications Inc. (NYSE:VZ) is included among the 11 Dogs of the Dow Dividend Stocks to Buy Now.

Dogs of the Dow: Why Verizon’s (VZ) High Dividend Yield Still Looks Safe

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A high dividend yield can sometimes signal trouble, but that’s not the case with Verizon Communications Inc. (NYSE:VZ), despite its 6.3% yield. The company’s latest quarterly performance suggests its dividend is well-covered.

In the second quarter, Verizon Communications Inc. (NYSE:VZ) posted solid results with revenue up 5.3% to $34.5 billion and adjusted earnings growing 6.1% to $1.22 per share. Wireless service revenue rose to $20.9 billion, leading the industry, while broadband and business wireless segments also expanded. The company added more than 300,000 new mobility and broadband customers, with Fios gaining ground. Recent efforts to improve customer loyalty and attract new users played a key role in this growth.

Over the first half of the year, Verizon Communications Inc. (NYSE:VZ) generated $16.8 billion in operating cash flow, $200 million more than the same time last year. After spending $8 billion to support its fiber and 5G infrastructure, it still had $8.8 billion in free cash flow— enough to easily cover $5.7 billion in dividends and leave $3.1 billion in excess cash.

Verizon Communications Inc. (NYSE:VZ) has raised its dividends for 18 consecutive years, which makes it a reliable choice among income investors. The company’s quarterly dividend comes in at $0.6775 per share.

While we acknowledge the potential of VZ to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than VZ and that has 100x upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.