"Is Verizon Communications Inc. (VZ) the Best Performing Dividend Stock to Buy Now?"

In the ever-evolving landscape of telecommunications, one company stands out as a beacon of stability and growth: Verizon Communications Inc. (VZ). With a strong track record of dividend increases and a robust financial performance, Verizon has become a favorite among income-focused investors. But is it the best performing dividend stock to buy now? Let's dive deep into the numbers and the narrative to find out.

Verizon's dividend yield and payout ratio are key metrics that make it an attractive option for dividend investors. As of the current date, Verizon has an annual dividend of $2.71 per share, with a yield of 5.88%. This yield is notably higher than the average dividend yield in the telecommunications sector, which typically ranges around 3-4%. For instance, AT&T, another major player in the telecommunications sector, has a dividend yield of approximately 6.5%, which is slightly higher than Verizon's. However, Verizon's dividend yield is still competitive and attractive to income-focused investors.

The payout ratio, which is the percentage of earnings paid out as dividends, is another crucial metric. Verizon's payout ratio is approximately 50.3%, indicating that the company retains a significant portion of its earnings for reinvestment and growth. This balance between dividend payouts and retained earnings suggests that Verizon is committed to both rewarding shareholders and investing in its future growth. In comparison, some of Verizon's peers may have higher payout ratios, which could indicate less room for future dividend increases or potential financial strain.

The implications of Verizon's dividend yield and payout ratio for its attractiveness as a dividend stock are positive. The high dividend yield makes Verizon an appealing option for investors seeking steady income, especially in a low-interest-rate environment. Additionally, the moderate payout ratio suggests that Verizon has the financial flexibility to continue increasing its dividends in the future, as it has done for 18 consecutive years. This consistency and growth in dividends are attractive to long-term investors who value stability and income generation.



Verizon's key financial metrics and performance indicators suggest that the company is well-positioned to continue its dividend growth. These metrics include revenue growth, earnings, dividend yield, and financial health indicators.

1. Revenue Growth: Verizon's revenue in 2024 was $134.79 billion, an increase of 0.61% compared to the previous year's $133.97 billion. This steady revenue growth indicates that the company is maintaining its market position and generating sufficient cash flow to support dividend payments. Historically, Verizon's revenue has shown a consistent upward trend, with revenues of $133.6 billion in 2021, $136.0 billion in 2022, and $136.9 billion in 2023. This trend suggests that the company has a stable revenue base to support its dividend policy.

2. Earnings: Verizon's earnings in 2024 were $17.51 billion, an increase of 50.73% compared to the previous year. This significant increase in earnings provides a strong foundation for continued dividend growth. The company's earnings have been volatile in the past, but the recent increase is a positive sign for future dividend payments.

3. Dividend Yield: Verizon has an annual dividend of $2.71 per share, with a yield of 5.88%. The dividend is paid every three months, and the next ex-dividend date is April 10, 2025. This high dividend yield is attractive to investors and indicates that the company is committed to returning value to shareholders. The dividend yield has been consistently high, with a yield of 6.3% as of the latest data, which is calculated by dividing the annual dividend payment by the prevailing share price.

4. Financial Health Indicators: Verizon's financial health indicators also suggest that the company is well-positioned to continue its dividend growth. The company has a total shareholder equity of $100.6 billion and total debt of $145.0 billion, which brings its debt-to-equity ratio to 144.2%. While this debt-to-equity ratio is high, it has been reducing from 176.9% to 144.2% over the past year, indicating that the company is taking steps to improve its financial health. The company's interest coverage ratio is 4.9, which means that it has sufficient earnings to cover its interest payments. Additionally, Verizon has cash and short-term investments of $4.2 billion, which provides a cushion for unexpected expenses or market downturns.

5. Dividend Coverage: Verizon's dividend coverage ratio is approximately 2.0, which means that the company's earnings are twice the amount of its dividend payments. This high dividend coverage ratio indicates that the company has sufficient earnings to cover its dividend payments and suggests that the dividend is sustainable.

6. Historical Dividend Growth: Verizon has a history of increasing its dividends. The company has increased its dividend for 18 consecutive years, which is a testament to its commitment to returning value to shareholders. The dividend per share has increased from $60.25 in 2018 to $67.75 in 2024, indicating a steady growth in dividend payments over time.

In conclusion, Verizon's key financial metrics and performance indicators, including revenue growth, earnings, dividend yield, financial health indicators, dividend coverage, and historical dividend growth, suggest that the company is well-positioned to continue its dividend growth. These metrics compare favorably to historical data, indicating that Verizon is committed to returning value to shareholders and has the financial strength to support its dividend policy.

Verizon's current stock price and valuation metrics play a crucial role in influencing the decision to invest in Verizon as a dividend stock. As of March 7, 2025, the latest closing stock price for Verizon Communications Inc. (VZ) is $45.92. This price is significant because it represents a 52.39% increase from the lowest stock price recorded on October 6, 2023, which was $30.14. This upward trend suggests that the stock has been performing well, which could be attractive to investors looking for both capital appreciation and dividend income.

One of the key valuation metrics to consider is the Price-to-Earnings (P/E) ratio. As of January 2024, Verizon's P/E ratio was 8.52. A lower P/E ratio generally indicates that the stock is undervalued relative to its earnings, making it an attractive investment. However, it is important to note that the P/E ratio can fluctuate, and as of the latest data, the P/E ratio has expanded to 9.09x, which still remains relatively low compared to the industry average. This suggests that Verizon's stock might be undervalued, providing a margin of safety for investors.

Another important metric is the dividend yield. Verizon has an annual dividend of $2.71 per share, with a yield of 5.88%. This high dividend yield is attractive to income-focused investors, especially in a low-interest-rate environment. The dividend is paid every three months, and the next ex-dividend date is April 10, 2025. This consistent and relatively high dividend payout can provide a steady stream of income for investors.

The dividend discount model (DDM) is another valuation method that can be used to assess the attractiveness of Verizon as a dividend stock. The DDM estimates the intrinsic value of a stock based on its expected future dividends. Given Verizon's strong track record of dividend increases—18 consecutive years—and its current dividend yield, the DDM would likely support a positive valuation for Verizon's stock. This model takes into account the company's ability to sustain and grow its dividends, which is a key consideration for dividend investors.

Additionally, Verizon's financial performance and stability further support its attractiveness as a dividend stock. In 2024, Verizon's revenue was $134.79 billion, an increase of 0.61% compared to the previous year. Earnings were $17.51 billion, an increase of 50.73%. This strong financial performance, coupled with a debt-to-equity ratio of 144.2%, indicates that Verizon has the financial strength to continue paying and potentially increasing its dividends.

In summary, Verizon's current stock price, low P/E ratio, high dividend yield, and strong financial performance make it an attractive investment for dividend-focused investors. The dividend discount model further supports this valuation, highlighting Verizon's ability to sustain and grow its dividends. These factors collectively influence the decision to invest in Verizon as a dividend stock, providing both income and potential capital appreciation.