S&P 500   4,145.19
DOW   32,803.47
QQQ   321.75
China July exports rise, with trade surplus at record-high
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Shift in war's front seen as ships cleared to leave Ukraine
What's in Democrats' big bill? Climate, health care, savings
Demand for grocery delivery cools as food costs rise
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What to Expect from the Markets in a Recession
Transit woes mount for Boston's beleaguered subway riders
Dems push Biden climate, health priorities toward Senate OK
pixel
S&P 500   4,145.19
DOW   32,803.47
QQQ   321.75
China July exports rise, with trade surplus at record-high
pixel
Shift in war's front seen as ships cleared to leave Ukraine
What's in Democrats' big bill? Climate, health care, savings
Demand for grocery delivery cools as food costs rise
pixel
What to Expect from the Markets in a Recession
Transit woes mount for Boston's beleaguered subway riders
Dems push Biden climate, health priorities toward Senate OK
pixel
S&P 500   4,145.19
DOW   32,803.47
QQQ   321.75
China July exports rise, with trade surplus at record-high
pixel
Shift in war's front seen as ships cleared to leave Ukraine
What's in Democrats' big bill? Climate, health care, savings
Demand for grocery delivery cools as food costs rise
pixel
What to Expect from the Markets in a Recession
Transit woes mount for Boston's beleaguered subway riders
Dems push Biden climate, health priorities toward Senate OK
pixel
S&P 500   4,145.19
DOW   32,803.47
QQQ   321.75
China July exports rise, with trade surplus at record-high
pixel
Shift in war's front seen as ships cleared to leave Ukraine
What's in Democrats' big bill? Climate, health care, savings
Demand for grocery delivery cools as food costs rise
pixel
What to Expect from the Markets in a Recession
Transit woes mount for Boston's beleaguered subway riders
Dems push Biden climate, health priorities toward Senate OK
pixel

It’s Time To Buy (More) High-Yielding Verizon (NYSE: VZ)

It’s Time To Buy (More) High-Yielding Verizon (NYSE: VZ)High-Yield Not Likely To Lag Much Longer

When the COVID-19 pandemic began one of the very first things I started to do was highlight the asset classes, sectors, industries, and companies investors should turn to in times of trouble. Among them were and are the high-yielding stocks including REITs, infrastructure, blue-chip, technology, and consumer names long-term investors can count on for income if not growth. In that light, it’s not surprising that dividend names like Clorox (NYSE: CLX), Conagra (NYSE: CAG), Apple (NASDAQ: AAPL), and Microsoft (NASDAQ: MSFT) have risen not only to post-pandemic highs but also to new all-time highs.

What is surprising is that other high-yield names, names like Verizon for instance, have failed to follow their counterparts higher. It’s understandable that AT&T might lag, it’s diversified model is a handicap in today’s environment what with theme parks and the production of new media under so much stress. Verizon (NYSE: VZ) on the other hand is a pure-play on a fundamental aspect of our technological world, the very ability to connect with the digital world. I mean, how else to do you connect with clients or eCommerce


The Results Are In, Steady Stable Growth Is Still The Forecast

Verizon reported this morning to little fanfare and I find that odd. This 4.4% yielding stock saw its revenue and earnings fall for the 2nd quarter, as expected, but there are so many positive within the report it’s hard to know where to start. On the top line, revenue of $30.40 billion fell -5.3% from the previous year but beat consensus by 140 basis points. Looking at it from the bigger picture, the quarterly results are a downtick from the 1st quarter but the first quarter saw a much-smaller -1.62% (adj) decline and forecast flat to +1.% for the 3rd.

On the bottom line, adjusted EPS of $1.18 beat consensus by $0.03 while GAAP EPS of $1.13 missed by $0.02 but once again the bigger picture is much brighter. While quarterly results fell 4% this follows a +5% increase in the first quarter and management is expecting flat to slightly positive growth in the following quarter. Basically, the company took a hit from the pandemic but it was small and fleeting. If you factor in the $0.14 impact management ascribed to the pandemic earnings growth would have accelerated from the 1st quarter.

On a subscription basis, the company’s bread and butter, consumer retail post-paid subscriptions missed consensus by 4.0% but were more than offset by the business segment. Business retail post-paid subscriptions grew 280K versus the 165K forecast on strength in the stay-at-home/work-from-home trends.

The Dividend, HIgh-Yield And Oh So Safe

It would be remiss of me to say that any companies dividend was invincible because that just isn’t the case. What I can say, however, is that when it comes to the data and metrics Verizon’s 4.4% yield and positive outlook for growth are about as safe as you can find. The payout ratio is running about 50% and there is some debt to consider but those are the only negatives I can find. Offsetting those issues, if you can find fault in them, is the company’s cash position, free-cash-flow, and coverage ratios all of which point to the 14th year of distribution increase.

Regarding the company’s cash. Verizon says it is well on the way to meeting its target $10 billion cash savings by the end of 2021. At this time, they’ve realized over $7.2 billion in savings and see additional opportunities for saving beyond the $10 billion target. At the end of the first half of 2020, the company’s free-cash-flow of $13.7 billion is up 74% from the prior year and growing.

The Technical Outlook: Lacklust Action Is About To Change

Shares of Verizon made a decent rebound from the March lows but has failed to stage the kind of rebound seen in other high-yield now low-yield pandemic plays. The price action has been meandering below the pre-pandemic highs for a couple of months now but I think that is about to change. Today’s results aren’t enough to spark a major rally I think, not by itself, but the stage is set for this company to springboard higher, at least to the $58 region, over the next few weeks. Longer-term, this stock is definitely a buy trading at only 11.5X it’s forward earnings and one that will deliver solid returns in both capital gains and dividends. And that’s not even considering the impacts that 5G is going to have on Verizon and the entire tech space.

It’s Time To Buy (More) High-Yielding Verizon (NYSE: VZ)

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Clorox (CLX)
2.2863 of 5 stars
$138.99+0.9%3.40%37.36Reduce$130.92
Conagra Brands (CAG)
2.2935 of 5 stars
$34.43+1.3%3.83%18.71Hold$35.67
Apple (AAPL)
2.7405 of 5 stars
$165.35-0.3%0.56%27.29Moderate Buy$179.41
Microsoft (MSFT)
2.9935 of 5 stars
$282.91-0.3%0.88%29.35Moderate Buy$335.72
Verizon Communications (VZ)
3.4192 of 5 stars
$44.95+1.2%5.70%9.01Hold$56.50
Compare These Stocks  Add These Stocks to My Watchlist 

7 Blue-Chip Dividend Stocks That Won’t be Impacted by Rising Interest Rates

Stock markets move in cycles. Historically, bull markets last longer than bear markets, but both can last longer than investors expect. But inside bull markets and bear markets, there can still be volatile price changes in the opposite direction. And when the market does reverse direction, the biggest gains are made by investors that stay the course.

In a volatile market, one option for staying the course is to invest in quality blue-chip dividend stocks. Blue-chip stocks are companies that have a large market capitalization. That means there are companies in mature industries.

That maturity allows these companies to deliver consistent performance that is independent of whatever is happening with the country's monetary policy. When interest rates fall, these companies are poised for growth. And when interest rates rise, these companies have strong balance sheets that allow them to maintain pricing power and profits to provide stability.

All of this means that investors with lower risk tolerances can stay in the market without having to give up on growth. And in this special presentation, we're giving investors seven blue-chip names that investors can buy with confidence no matter what is happening with interest rates.

View the "7 Blue-Chip Dividend Stocks That Won’t be Impacted by Rising Interest Rates".

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