AT&T Inc. (NYSE:T) closed at $24.30 on October 2 and Verizon Communications Inc. (NYSE:VZ) at $45.92.
They sell the same service over networks of similar reach, and the market pays them very differently. Verizon yields 6.16% and AT&T 4.57%. That gap is the argument, and it is not about generosity.
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AT&T Is Growing, and Verizon Is Not:
The revenue lines have separated, which for two companies selling an identical service is the fact that matters most. AT&T grew revenue 2.30% in the most recent quarter. Verizon shrank 0.70%. Earnings tell the same story more sharply. AT&T grew 2.80%, and Verizon fell 23.30%.
Neither figure is large, and the direction is the whole point. In a mature industry, growth comes from taking customers off a competitor, and one of these two is losing them. Profitability follows. AT&T keeps 16.94% of revenue as net profit against 11.64% at Verizon, and earns 18.34% on equity against 15.84%. So AT&T is the more profitable business, the growing business, and the one earning more on its shareholders’ capital.
Verizon’s answer is scale, at $138.89 billion of revenue against $127.24 billion. Its 23.00% operating margin is close to AT&T’s 24.79%. Running the network is not where these two differ. Filling it is.
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The Debt Decides How Much the Yield Is Worth:
Both carry enormous borrowings, and the sizes are not the same. Verizon carries $193.65 billion of debt against $1.8 billion of cash. AT&T carries $165.76 billion against $17.57 billion.
Debt-to-equity is 184.08% at Verizon and 129.05% at AT&T, and the cash cushion is roughly ten times larger at AT&T. Enterprise value is where that reprices the shares. Verizon’s is $379.99 billion against a market value of $193.28 billion, so roughly half of what a buyer pays is inherited debt.
That is why the earnings multiples flatten both, and the enterprise multiples do not. Verizon trades at 7.91 times enterprise value to EBITDA against 5.93 times at AT&T.
Cash generation is the test of the dividend. Verizon produced $17.47 billion of levered free cash flow against AT&T’s $10.14 billion, so the higher yield is better covered than the debt load suggests. A 6.16% yield on a shrinking revenue line is the market’s judgment rather than a bargain. Both of these are owned for the income, which makes the comparison with other payers the relevant one.
We ranked this year’s best-performing dividend stocks here.
The Valuation Case:
AT&T closed at $24.30 on October 2, down 6.07% over twelve months. Verizon closed the same day at $45.92, up 10.81%.
Sustainability is about subscriber numbers rather than networks. The networks are built, and the spending on them is similar.
On price, the two measures disagree. AT&T is cheaper on trailing earnings at 8.35 times against 12.11 times, and Verizon is cheaper on forward estimates at 8.73 times against 9.90 times.
That crossover is the market saying AT&T’s earnings will fall and Verizon’s will recover, which is the opposite of what both companies just reported.
A PEG ratio of 0.83 at Verizon against 1.54 at AT&T points the same way. Neither company is growing fast enough for the multiple to matter much.
Verizon ranked 9th in our list of the 10 Best US Stocks to Buy Under $50. To see which stocks outranked it, click HERE.
Conclusion:
AT&T is the better of the two in terms of what the businesses are doing. It is growing revenue while Verizon shrinks and earns more on equity. It also holds ten times the cash and trades at 5.93 times enterprise value to EBITDA against 7.91 times. However, Verizon pays 6.16% against 4.57% and covers it with $17.47 billion of free cash flow against AT&T’s $10.14 billion. An investor choosing Verizon is buying the income and accepting a shrinking subscriber base to get it. The number to watch for both is net subscriber additions.
Market Sentiment:
AT&T Inc. was held by 68 hedge funds with a combined stake value of about $3.99 billion at the end of Q2 2026 in the Insider Monkey database. This is down from 72 hedge fund holders with a cumulative investment value of around $5.80 billion in the previous quarter.
Verizon Communications Inc. was held by 79 hedge funds with a combined stake value of about $3.23 billion at the end of the same quarter. This is up from 75 hedge fund holders with a cumulative investment value of around $4.05 billion three months earlier.
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This article is originally published at Insider Monkey.
