Verizon Communications Inc. (VZ): A Top Widow and Orphan Stock for Long-Term Investment

Verizon Communications Inc. (VZ) has long been a favorite among income-oriented investors, thanks to its consistent dividend growth and strong financial performance. As a telecommunications giant with a robust network and a commitment to innovation, Verizon is well-positioned to continue delivering value to shareholders in the long term. In this article, we will explore why Verizon is among the best widow and orphan stocks to invest in, focusing on its dividend history, future prospects, and the company's ability to balance capital expenditure needs with maintaining a strong credit profile.

Dividend History and Future Prospects

Verizon has a long history of paying and increasing dividends, with an average annual growth rate of approximately 3.5% from 2010 to 2024. This consistent dividend growth provides a stable and increasing income stream for investors, making Verizon an attractive choice for retirees and other income-focused investors. In 2024, Verizon's revenue was $134.79 billion, an increase of 0.61% compared to the previous year's $133.97 billion. Earnings were $17.51 billion, an increase of 50.73% from the previous year. This strong financial performance enables Verizon to continue investing in its network and other growth opportunities while maintaining its dividend payout.

Verizon expects to generate service and other revenue growth of at least 4% in 2024 and beyond, driven by 5G mobility, nationwide broadband, mobile edge compute, and business solutions. The company's strategic partnerships and investments in areas such as the metaverse, edge computing, and private networking solutions further enhance its long-term growth potential.



Balancing Capital Expenditure Needs and Maintaining a Strong Credit Profile

Verizon has a disciplined capital allocation model that supports its investments in the network, an ongoing commitment to the dividend, and strengthening of the balance sheet. The company aims to maintain a low single-A credit profile, with a net unsecured debt to adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) leverage target of 1.75 times to 2.0 times. This target is consistent with a low single-A credit profile. Verizon's strategy involves investing in its network while also maintaining a strong financial position, which allows it to continue delivering value to shareholders and supporting its long-term growth.

Verizon's significant debt load is managed through a combination of disciplined capital allocation, strategic partnerships, and investments in high-growth areas. The company's strong financial performance and commitment to maintaining a strong credit profile ensure that it can continue to invest in its network and other growth opportunities while delivering value to shareholders.

Conclusion

Verizon Communications Inc. (VZ) is a strong candidate for a "widow and orphan" stock due to its consistent dividend growth, strong financial performance, network leadership, diversified revenue streams, strong balance sheet, and strategic partnerships and investments. These factors contribute to Verizon's long-term investment potential and make it an attractive choice for income-focused investors and those seeking stable, long-term growth. As Verizon continues to expand its network and explore new growth opportunities, it remains well-positioned to deliver value to shareholders in the long term.