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Blue Chip Stocks In Focus: Verizon

When investors consider buying high-quality stocks, the term ‘blue chip’ often comes to mind.

There is no official definition of what constitutes a blue chip. Our definition of a ‘blue chip’ stock, is a company that has satisfied two criteria.

First, the company in question has an operating history of over 100 years. Second, it pays a dividend, with a current dividend yield of at least 3%.

A company with these two qualities possesses a strong brand, durable competitive advantages, and demonstrates a commitment to shareholders.

Verizon Communications (VZ) is a blue-chip stock. The company dates all the way back to the late 19th century, to The Bell Telephone Company.

It has an attractive dividend yield of 5.3%. It is one of 405 stocks with a 5%+ dividend yield. You can see the full list of established 5%+ yielding stocks here.

And, Verizon has increased its dividend for 10 years in a row, making it a Dividend Achiever, which have raised their dividends for 10+ consecutive years.

This article will discuss what makes Verizon a blue-chip dividend stock.

Business Overview

Verizon, in its current form, was created on June 30th, 2000, when Bell Atlantic and GTE Corp. came together in one of the largest mergers in U.S. history.

Today, Verizon is a major U.S. telecommunications company. Its prized asset is Verizon Wireless, the largest wireless carrier in the U.S.

Verizon’s adjusted earnings-per-share, which excludes non-recurring items, fell 3% in 2016, to $3.87, due to a 4.3% decline in revenue.

Still, Verizon remains highly profitable.

The company’s huge profits are the result of its high-quality network. Due to massive investments in its technology infrastructure, Verizon boasts an industry-leading network

Source: May Analyst Meeting, page 11

Unfortunately, conditions did not improve for Verizon to start 2017. First-quarter revenue declined 7% from the same quarter last year, and missed analyst expectations.

Verizon experienced its first-ever decline in core wireless customers. Net retail postpaid connections fell by 307,000, including 289,000 in phones.

The good news is, that the company’s decision to offer unlimited data plans helped stem the customer losses about halfway through the first quarter.

Looking ahead, Verizon is aggressively investing in strategic initiatives, which should help the company return to growth in 2018.

Growth Prospects

Two major growth catalysts for...