 |
| Dow | Nasdaq | About Us | Disclaimer |  |
RSS Feed |  |
Follow us on Twitter |
|
Featured Advisors |
Thursday July 22, 2010
Verizon (VZ): Ready for growth?
by Glenn Rogers, contributing editor Gordon Pape's Internet Wealth Builder  What would be a good stock to carry you through the rest of this year? One beaten-down large cap with a substantial dividend yield and a strong balance sheet that has caught my eye is Verizon Communications (VZ). I think this is a good stock to own no matter who turns out to be right in the bears vs. bulls debate. Verizon stock looks cheap right now with the share price down 17% from its 52-week high. It is now yielding over 7% and it is highly unlikely that the dividend will be cut. In fact, the company has grown its dividend payout by nearly 4% annually for the past five years. Verizon is a massive business with a work force of more than 217,000 and revenues of more than $107 billion (figures in U.S. dollars). The company has 93 million customers in America and over 220 million worldwide. It offers the usual telco services of wireless and hardline along with broadband services and television offerings called FiOS, which the company claims offers the best picture quality anywhere because of the use of fiber optic cables. 
In the U.S., Verizon is widely believed to have the most reliable wireless network and the consensus is that offers some advantage against their main competitor, AT&T. However, AT&T has had the exclusive right to distribute Apple's popular iPhone and now the equally popular iPad. This has affected Verizon's wireless growth in recent years. However, all that is likely to change in 2011 when it widely expected that Verizon will begin selling Apple products. Most people believe that there will be a massive migration of iPhone users to the Verizon network when this comes to pass. Additionally, Google's increasingly popular Android phones are starting to gain traction which is helping the company battle back against the iPhone. In fact, the domestic wireless business grew by 26% last year which greatly offset the 4.4% decrease in their wireline business. The company continues to aggressively build out their network, driving towards 4G technology which they will begin to deploy in the fall of this year. They have to continue to invest to keep up with the increased demand for data services which exceeded 33% of their service revenue last year while web and e-mail services revenue was up 43.5%. What could go wrong? Their wireline business continues to decline at a slow but steady pace which will continue to be a drag on the business and the wireless side will continue to be competitive. But overall, I like Verizon's growth prospects and the healthy dividend of $1.90 annually provides good cash flow while we're waiting for the growth to be reflected in the share price. We recommend buying now with a target of $34. Learn more about this financial newsletter at Gordon Pape's Internet Wealth Builder. |
News Flash
|
|