2 Billion More Reasons for Income Investors to Buy 6.4%-Yielding Verizon Stock

Core Viewpoint - Verizon Communications is an attractive option for income investors due to its high dividend yield of 6.4% and a history of 18 consecutive years of dividend increases [1][4]. Financial Performance - Verizon increased its full-year free cash flow guidance to between $19.5 billion and $20.5 billion, up from a previous outlook of $17.5 billion to $18.5 billion, providing more security for its dividend [4]. - The company raised the lower end of its full-year adjusted earnings per share (EPS) growth guidance by 1% and the lower end of its adjusted EBITDA growth outlook by 0.5% [5]. Growth Drivers - Verizon's optimism is supported by solid Q2 results, where it exceeded Wall Street's revenue and earnings estimates, and it anticipates benefits from tax reform [6]. - The sales funnel for AI Connect has nearly doubled to $2 billion since the launch of its AI-enabled network and connectivity solutions [9]. - The pending acquisition of Frontier Communications is expected to enhance growth, with approvals already received from multiple regulatory bodies [10]. Management and Strategy - The expected additional $2 billion in free cash flow is attributed to the company's exceptional management team, emphasizing a disciplined approach to growth [11][12]. - Management has reiterated a focus on sustainable growth rather than growth for its own sake, aiming to maintain the dividend growth trajectory [12][13]. Valuation - Verizon's forward price-to-earnings ratio stands at 8.7, significantly lower than the S&P 500's ratio of 22.7 and below other telecom competitors like AT&T and T-Mobile [8].