This 6.5%-Yielding Dividend Stock Offers Income Certainty in Uncertain Times

Core Viewpoint - The current economic uncertainty, driven by the Trump administration's tariff policy, raises concerns about a potential recession, but Verizon's business model is expected to remain resilient and its dividend stable amid these challenges [1][2]. Financial Performance - Verizon generated $33.5 billion in revenue in the first quarter of the year, reflecting a 1.5% increase, with wireless service revenue reaching $20.8 billion, up 2.7% [3]. - The company reported cash flow from operations of $7.8 billion in the first quarter, a $700 million increase from the previous year, allowing it to cover capital expenses of $4.1 billion and dividend payments of $2.9 billion, resulting in $700 million in excess free cash flow [4]. - Verizon produced $8.6 billion in excess free cash flow after capital expenses and dividend payments last year [4]. Balance Sheet Strength - The company ended the first quarter with a leverage ratio of 2.3, down from 2.6 a year ago, indicating a stronger balance sheet [5]. - Verizon's strong financial metrics support its bond ratings of A-/BBB+/Baa1 [5]. Dividend Stability and Growth - Verizon anticipates total wireless service growth of 2%-2.8% and adjusted earnings-per-share growth of up to 3% in 2025, projecting free cash flow of $17.5 billion-$18.5 billion after capital expenses, which comfortably covers its annual dividend outlay of approximately $11.6 billion [6]. - The company has a history of increasing its dividend for 18 consecutive years, demonstrating resilience even during economic downturns [9]. Strategic Initiatives - Verizon plans to use its excess free cash flow to strengthen its balance sheet ahead of a $20 billion all-cash acquisition of Frontier, expected to close next year, which will enhance its fiber network and generate at least $500 million in annual cost savings [7]. - The company has invested significantly in upgrading its networks to faster 5G and fiber technology, which is expected to help limit customer churn [8]. Market Position - Verizon is characterized as a recession-resistant business that generates substantial recurring cash flow, making it a safe investment for dividend income during uncertain economic times [10].