Source: PaxForex Premium Analytics Portal, Fundamental Insight
Verizon shares extended their impressive run following a robust fourth-quarter report, contributing to a total return of over 35% since mid-October. Despite this significant surge, the stock remains surprisingly attractive at its current level.
In the latest quarter, Verizon reported adjusted earnings of $1.08 per share, slightly down from $1.19 in the same period last year. However, the revenue of $35.1 billion surpassed expectations, outperforming the average forecast of approximately $34.6 billion.
Of greater significance than the financials was Verizon's strong momentum with customers. Postpaid phone gross adds surged 17% year over year, marking the best performance in four years. Looking ahead, Verizon aims for positive consumer postpaid phone net adds in full-year 2024, emphasizing disciplined financial growth, as stated by CFO Tony Skiadas during the fourth-quarter earnings call.
With this momentum, management forecasts total wireless service revenue growth of 2% to 3.5% in 2024. While this may seem modest, considering Verizon's low valuation of 9 times adjusted 2024 earnings estimates, the company is well-positioned to meet and exceed expectations.
Verizon stands out not just for its strong performance but also for its exceptional dividend yield, currently at 6.7%. This compares favorably to the S&P 500's average dividend yield of 1.5%. Moreover, Verizon's dividend is on a steady upward trajectory, with a 2% increase announced in September, marking 17 consecutive years of dividend growth.
The significance of such a robust dividend should not be underestimated. It serves to de-risk the inherent volatility of the stock, providing investors with substantial cash payments every quarter. These predictable payouts not only help mitigate stock price fluctuations but also offer shareholders a consistent income stream.
While concerns about dividend cuts exist, they are unlikely given Verizon's commitment to annual dividend increases, a top capital allocation priority. With the completion of major capital expenditures related to the C-band network, the company now has more resources to focus on debt reduction and dividend payments. For instance, fourth-quarter capital expenditures were $4.6 billion, down from $7.3 billion in the year-ago quarter.
In summary, Verizon remains an attractive stock, particularly for income-seeking investors, given its strong dividend yield and commitment to sustained dividend growth.
As long as the price is above 39.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 41.96
- Take Profit 1: 44.00
- Take Profit 2: 47.00
Alternative scenario:
If the level of 39.00 is broken-down, follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 39.00
- Take Profit 1: 37.00
- Take Profit 2: 35.00
