I initiated a position in Verizon Communications Inc (VZ) position on 3/6/2020 at $57.156. Verizon is not in my top 15 largest holdings.
I’ve been watching Verizon for a while attracted to the utility of the company and it’s dividend looking to build more a of an income producing side of my portfolio. I’ve also wanted to have more exposure to 5G but feel that many of the top companies benefiting from this area are bit over priced. Verizon seems to be a good compromise on this.
Believe it or not my wife and Heavenly have never had a cell phone that had wireless service until recently. We recently got a couple Tracfone’s with a year of service on them and found that we most likely are using the Verizon network on them as Tracfone is basically a reseller of the major wireless networks. Therefore this investments meets my wishes of being something that I actively use myself. We now don’t have any landline phone service. I see this trend only continuing overall. Verizon used to be the primary landline provider in my area, but they sold the business to Fairpoint which is now Consolidated Communications. I think this was a great move in that they could then use that money to re-invest in the wireless network. I believe eventually they will end up getting back a good portion of the customers they sold a while back such as myself.
I think Verizon makes for a stable and safe place to park cash as well during uncertain times such as these to earn a safe and stable dividend that’s quite good in this low interest rate environment.
Verizon’s Strengths
- Largest network with great reputation
- Largest customer base
- Making significant investments in fiber-optic network and 5G wireless technology
Verizon’s Threats
- Lower wireless technology costs are reducing costs to build a network
- Balance sheet/ debt load
Verizon’s Valuation
- Price/Forward Earnings: 11.29
- Earnings Yield %: 8.33
- Forward Div Yield: 4.41%
I believe Verizon and their biggest rival AT&T will continue to dominate the space and use their size to keep costs down and prices low making it difficult for new competition to emerge. The continual investment in new technology is a major barrier to entry. The current earning yield and dividend yield are very attractive to me.
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