Verizon: FWA Slowdown Is Real, But The Turnaround And 6% Yield Make It A Buy

Verizon's fixed wireless access business is losing steam. That's the story you'll hear today, and there's a factual basis for it. But the broader picture that came out of the second-quarter earnings report tells a different one: Consumer postpaid phone net additions are at a five-year high for this season, fiber broadband is accelerating, churn is falling, free cash flow is up 24%, and management has raised full-year guidance for the second straight quarter.

The stock trades at 9.8 times forward earnings with a dividend yield above 6%. I'm rating Verizon a Buy.

What actually happened in Q2

Verizon reported second-quarter adjusted EPS of $1.30, beating the consensus estimate of roughly $1.28, on revenue of $34.3 billion, down 0.7% from a year ago. The revenue miss is mostly equipment, not service. Equipment revenue fell nearly 20% as customers hold onto phones longer and Verizon has deliberately cut back on device subsidies to protect margins.

Service revenue tells the better story. Mobility and broadband service revenue grew 2.8% year over year. Adjusted EBITDA - earnings before interest, taxes, depreciation, and amortization, Verizon's preferred cash-earnings proxy - reached a record $13.7 billion, with the margin expanding to 40.1% from 37.1% a year earlier. Free cash flow for the quarter was $6.4 billion, up 24.4% year over year.

That cash generation matters for what follows, because it's the engine behind both the dividend and the expanded share buyback program, which CEO Dan Schulman raised to up to $4.5 billion for the full year.

Postpaid phone: the big improvement

Verizon reported 184,000 total postpaid phone net additions in Q2, well above the consensus forecast of 106,000. The company's Consumer Segment posted its best second-quarter postpaid phone net additions in five years. A year ago, the company was shedding postpaid subscribers in this season.

Consumer postpaid churn fell to 0.92%, down from 0.97% in Q2 2025. That's a small basis-point move on the surface, but in an industry where the total addressable market is effectively capped, a one-percentage-point reduction in churn compounds into material retained revenue. Schulman has spent his first full year driving the cost of customer acquisition and retention down - he said it was down roughly 35% in Q1 versus Q4 2025 - while replacing promotional pricing with simplified plans and converged mobile-plus-broadband bundles.

Prepaid net adds were 73,000, marking eight consecutive quarters of positive additions. That segment was a chronic bleed hole before Schulman took over.

FWA: the slowdown the headline catches

Now to the fixed wireless slowdown. Verizon added 193,000 FWA subscribers in Q2 2026, down from 275,000 in Q2 2025 and 261,000 in Q3 2025. The deceleration has been steady and, as MoffettNathanson analyst Craig Moffett called it last year, "striking" in the residential segment.

This isn't a surprise or a sign of structural failure. FWA is a service that has rapidly absorbed the most price-sensitive cord-cutters and the easiest rural addresses. The low-hanging fruit is gone. What's more, Verizon's C-band spectrum - the mid-band wireless capacity that would extend FWA coverage - has been prioritized for mobile service first. The company still believes FWA can reach 8 million to 9 million subscribers by 2028 and has been rolling out a new platform for multiple-dwelling units to extend the addressable market.

The bigger point is that FWA was always meant to be a beachhead, not the destination.

Fiber: the real growth engine

Fiber broadband net additions jumped to 155,000 in Q2 2026, up from 127,000 in Q1 and just 32,000 in Q2 2025. Total broadband net additions were 348,000, up 12.3% year over year. Verizon now has roughly 17.1 million combined FWA and fiber broadband connections.

Fiber is where the margin story lives. Fixed wireless is cheap to deploy but carries lower ARPU and higher churn than fiber. As fiber additions accelerate and FWA growth normalizes, the average quality of the broadband subscriber base improves. The Frontier acquisition - closed at the start of 2026 - adds hundreds of thousands of fiber passings and, critically, a massive cross-sell opportunity for converged mobile-plus-fiber bundles. Schulman noted that converged customers who combine mobile with fiber have a mobility churn rate 40% lower than Verizon's overall churn.

Management raised full-year guidance for mobility and broadband service revenue, cash flow from operations, free cash flow, and adjusted EPS. They're forecasting mobility and broadband service revenue growth of approximately 4.0% in Q4, up from the 2.8% run rate in Q2. That sequential acceleration is what you want to see.

Valuation: cheap by design

Verizon trades at 9.8 times forward earnings and 7.5 times EV/EBITDA. For comparison, AT&T trades at roughly 7.4 times trailing earnings and 6.2 times EV/EBITDA. Verizon's premium is small and justified by better free cash flow generation, lower churn, and an accelerating fiber story that AT&T's national fiber business hasn't matched.

The stock has climbed 14.9% year to date and is up roughly 10% over the past year. At $46.81, it's still well below its 52-week high of $51.68.

The 6.0% dividend yield is a real anchor here. Verizon's payout ratio sits at roughly 67% of trailing earnings, and free cash flow of $20.2 billion over the trailing twelve months easily covers the $9.4 billion the company paid in total shareholder returns in the first half of 2026. The balance sheet is heavy - $305 billion in total debt, of which roughly $137 billion is unsecured - but the net unsecured debt to adjusted EBITDA ratio has been falling as cash flow compounds. Schulman has also already paid down about half of the Frontier acquisition debt and expects to clear most of it by year-end.

Risks

Three risks to track:

• FWA deceleration accelerates. If FWA net additions fall below 150,000 per quarter, it would signal the business has peaked and Verizon's convergence thesis loses a key component for price-sensitive customers.
• Fiber acceleration stalls. The fiber story has only two strong quarters behind it. If Q3 and Q4 net additions regress toward the 100,000 level, the margin improvement from a higher-quality broadband mix slows.
• Debt load in a rising-rate environment. Verizon's interest expense is large. If rates stay elevated or rise further, it pressures the already thin net income margin. Reported net income fell 23% in Q2, though that was driven largely by $1.8 billion in one-time charges, including a $746 million loss on the disposition of the international wireline business.

The verdict

Verizon is not a growth story. It's a cash generation story with improving retention, a fiber buildout that's finally showing traction, and a management team that has raised guidance twice in a row instead of lowering it. The FWA slowdown is real, but it's the expected normalization of a service that has already pulled in most of its addressable early adopters.

The valuation is cheap enough to absorb FWA deceleration and still leave room for fiber and mobile momentum to compound. At 9.8 times forward earnings with a 6% yield and 24% free cash flow growth, the risk/reward favors buying.

Rating: Buy. The key metric to watch next is Q3 fiber broadband net additions. If that number holds above 140,000 and churn stays at or below 0.92%, the case strengthens. If fiber falls back below 100,000 or churn reaccelerates above 1.0%, I'd move to Hold.