Summary
- Verizon has underperformed the market over the last five years as the dividend yield dipped to only 4%.
- The stock remains far more expensive than AT&T, capping any stock gains.
- The 5G push is the best opportunity for outsized gains, and it is still a couple of years away.
- No rush to own the stock, with the best returns to be achieved from acquiring Verizon closer to a 5% yield.
As my previous investment thesis has highlighted, Verizon Communications(VZ) doesn't support a lot of upside to the stock when the dividend yield touches 4%. The stock is back up to $57 where the dividend yield dips to 4.2%, capping any likely gains in the short term, while 5G offers the potential home-run the stock needs.
Image Source: Verizon website
4% Dividend Yield
Due to a competitive domestic wireless market, Verizon has been unable to grow earnings in any meaningful way lately. For this reason, the dividend hikes are rather meager.
For the last decade, Verizon hasn't seen the dividend tick below 4% for any meaningful time period. With an annual payout of $2.41 per share, the dividend yield hits 4.0% at $60.25.
