Stock of the Week #09: VZ

By: Prem Samritpricha

2000px-Verizon_logo.svg

VZ chart SOTW

3 Reasons to Buy the Stock:

  • Robust free cash flow
  • High dividend yield at 4.52%
  • Extraordinary target price

Summary:

I suggest that Verizon’s stock should be incorporated with a diversified portfolio. The company is producing resilient free cash flow with the dividend yield at 4.52%. In the previous year VZ’s management agreed on raising the dividend to 2.7%. This increased their yearly dividend to $2.26 per share, making it their ninth straight year increasing it. Last year, VZ’s free cash flow was at $21.2 billion while it paid $8.5 billion to its dividends. Therefore, their free cash flow dividend payout ratio 40%!

Since 2016, VZ’s stock have increased up to 8.1%, and the S&P 500 Index have dropped byVZ SOTW 9.4%, while the Nasdaq Composite Index have also dropped by 14.5%. The average target price of analysts is $52.33, or slightly higher than the time of this post. However, in my opinion the stock can keep increasing steadily.

To add on to my argument, VZ remains hungry to constantly re-invest in their networks to better their future. As a result of this, their investment in the previous year have situated themselves in the driver seat to better their growth and to sustain their network leadership spot. With VZ stock being ranked second to all of 34 Russell 3000 telecommunication stocks, I recommend buying them now and especially on any dip below the $50 level.

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