Conservative · Stocks to Consider and Updates

Stock to Consider – Verizon Communications

VZ As posted on October 27th, Verizon Communications, Inc. (VZ: NYSE – $50.25) is a worthy choice for the risk-averse investor as well as for those with a craving for current income and, therefore, it was additionally included in the conservative portfolio. A household name for those who use their mobile services, New York-based Verizon is one of the world’s leading providers of communications, information and entertainment products and services. Created through the merger of Bell Atlantic and GTE Corporation in June 2000, Verizon subsequently acquired MCI, portions of Alltel Wireless and in February of this year closed on the remaining 45% interest in Verizon Wireless it did not own from Vodafone. The company operates two reporting segments: Wireless and Wireline.  Wireless’ communications products and services include mobile voice and data services and equipment sales, which are provided to consumer, business and government customers. It is the largest wireless service provider in the United States as measured by retail connections and revenue. Wireless has nearly 105 million retail connections and 2013 revenues of about $81.0 billion, representing approximately 67% of Verizon’s aggregate revenues. The company has substantially completed the deployment of their 4G LTE network, which is available to 97% of the U.S. population in more than 500 markets covering some 305 million people, including those in rural areas served by partners. The Wireline segment provides voice, data and video communications products and enhanced services including broadband video and data (FIOS), corporate networking solutions, data center and cloud services, security and managed network services and local and long distance voice services. The company provides these products and services to consumers in the United States as well as to carriers, businesses and government customers in over 150 other countries around the world. In 2013, Wireline revenues were $39.2 billion, representing approximately 33% of Verizon’s aggregate revenues.

The company has been on quite a run of late, reporting double-digit year-over-year percentage growth in adjusted earnings per share for the 10th time in the past 11 quarters. See recent third quarter results. 

Based on recent price and earnings momentum, Verizon should at least keep pace with the overall market, if not exceed the averages as results continue to gain traction following the complete ownership of Verizon Wireless operations. What’s more, at the recent quotation, its appreciation potential through late decade is also decent, especially when viewed on a risk-adjusted basis. Finally, the impressive annual dividend of $2.20 yielding 4.38%, only serves to sweeten the pot.

In the interest of full disclosure, I maintain a position in Verizon Communications and hold it in some of my managed accounts.


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