Verizon's Dividend Defiance: Can Soft Subscriber Growth Be Overcome?

In an era of economic uncertainty, investors often turn to defensive dividend stocks—those with stable cash flows, manageable debt, and a track record of rewarding shareholders. Verizon (VZ) has long fit this profile, but recent subscriber losses in its core wireless business have raised questions: Is this telecom giant still a reliable dividend stalwart, or has its defensive edge eroded? Let’s dive into the data.

Subscriber Growth: A Mixed Picture, But Broadband Shines

Verizon’s Q1 2025 results painted a contradictory picture. While its postpaid wireless segment saw a net loss of 289,000 subscribers, the drop was steeper than expected. This decline, driven by recent price hikes, marks a sharp reversal from Q4 2024’s 568,000 net additions. However, Verizon reported improving trends in March and April, with mid-single-digit postpaid gross additions and early traction for new offerings like its three-year price lock and free phone guarantee.

The bigger story lies in broadband. Verizon added 339,000 net broadband subscribers in Q1, fueled by its C-band spectrum-driven fixed wireless service (308,000 net adds) and Fios internet growth (45,000 net adds). Total broadband connections now stand at 12.8 million, a 13.7% year-over-year surge, with 4.8 million customers using fixed wireless. This diversification matters: while wireless growth falters, broadband’s steady expansion—targeting 8–9 million fixed wireless subscribers by 2028—buffers Verizon’s revenue streams.

Dividend Defense: Cash Flow Remains the Shield

Verizon’s dividend yield of 6.4% makes it a magnet for income investors. But can this payout survive weaker subscriber growth? The answer lies in its financial fortress:

• Q1 free cash flow of $3.63 billion comfortably covered $2.85 billion in dividends, with a 1.3x coverage ratio.
• Over the trailing 12 months, free cash flow hit $18.73 billion, far exceeding $11.03 billion in dividends (a 1.8x coverage ratio).
• A leverage ratio of 2.3x (net debt/EBITDA) stays within Verizon’s target range, leaving room to navigate economic headwinds.

The company’s 2025 guidance reinforces confidence: it expects wireless revenue growth of 2.0–2.8% and adjusted EPS growth of 0–3%, with free cash flow projected between $17.5 billion and $18.5 billion. CEO Hans Vestberg emphasized that even in a slowing economy, Verizon’s diversified revenue streams and disciplined capital allocation will sustain the dividend.

Strategic Shifts: Can New Plans Reverse the Tide?

Verizon’s struggles in postpaid wireless aren’t entirely alarming. The company is pivoting to myPlan and myHome—customizable bundles offering perks like discounted streaming services. These plans aim to stabilize retention by reducing price sensitivity and offering flexibility. Meanwhile, its C-band rollout and Fios expansion are turning broadband into a growth engine, not just a cash cow.

The three-year price lock and free phone guarantee also signal a shift toward long-term customer commitment, potentially reducing churn. While early, these strategies align with Verizon’s “customer-first” mantra, which could stabilize postpaid metrics in coming quarters.

Conclusion: Defensive Dividend Profile Holds—For Now

Verizon’s 6.4% dividend yield remains compelling, underpinned by robust free cash flow and prudent financial management. Even with Q1’s postpaid subscriber loss, the dividend’s safety is clear: its 1.8x TTM coverage ratio and low leverage ratio of 2.3x provide ample buffers.

While wireless headwinds persist, broadband’s rapid growth—13.7% YoY expansion—and disciplined capital allocation ensure Verizon’s defensive moat remains intact. The company’s strategic bets on myPlan, myHome, and fixed wireless suggest it can regain postpaid momentum without sacrificing margins.

Investors seeking stability should note that Verizon’s dividend has been raised for 13 consecutive years—a streak it’s likely to extend. In a low-growth environment, this telecom titan’s blend of high yield, cash flow resilience, and diversification makes it a defensive dividend stock worth holding—provided its postpaid rebound materializes.

In short, Verizon’s dividend remains a pillar of reliability. The soft subscriber data is a speed bump, not a roadblock, for income-focused investors.