Even though VZ stock has always done worse than the S&P 500, its dividend often attracts investors. These investors are looking for a steady income. If 5G wireless services increase earnings and sales again, Verizon stock could be a lot more appealing.
Are you thinking of the best stock to invest in? Is your mind on the Verizon stock? Are you wondering “Is Verizon a good to buy stock a buy now?” We have the answers. Keep reading.
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The Basics of VZ Stock in an Aging Market
Revenue growth is still a problem. The U.S. wireless market is already full, a long-term problem for Verizon. Many people have put off getting new smartphones plus, mobile videos that use a lot of data haven’t become a big moneymaker.
Verizon’s adjusted earnings for the first quarter just beat Wall Street’s predictions, and the company’s sales met expectations. Without items, Verizon made $1.35 per share in the quarter that ended on March 31. With the sale of Verizon Media, revenue went up by 2 percent to $33.6 billion.
A year ago, Verizon made $32.9 billion in sales and made $1.36 per share. Analysts had predicted that Verizon would make $1.34 per share on $33.6 billion in sales for the quarter.
On the plus side, the company said it lost 36,000 postpaid wireless phone customers. Instead of the 75,000 that analysts thought it would lose. The money made from wireless services went up by 9.5% to $18.3 billion.
Verizon changed its outlook for 2022, saying that adjusted earnings per share will be at the lower end of what it had said before. Verizon now expects “reported wireless service revenue growth at the lower end of the range of 9% to 10% for the whole year of 2022.
Also, the company expected “adjusted EBITDA growth at the lower end of the previously guided range of 2% to 3%.”
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Verizon Stock: Will 5G Wireless Save Us?
Thanks to the arrival of 5G, Verizon is likely to keep doing well. In 2021, people started to want 5G very much. At the end of Q3, more than a quarter of Verizon’s customers were using a 5G-enabled device, up from about 20% in Q2.
Through the first three quarters of 2019, sales of 2021 equipment were up 34.8% compared to last year. Verizon’s equipment sales will continue to do well as more customers upgrade to devices that can use 5G.
Customers have upgraded their data plans and phones since 5G networks have made them faster. At the end of Q3, more than 30% of Verizon’s accounts were on unlimited plans that cost more. Even more, people signed up for new accounts, and 66 percent chose unlimited data.
This trend enabled Verizon to earn $17.1 billion in revenue from wireless services in Q3. This is up from $16.4 billion in the same quarter last year. As the 5G network grows and gets used, we expect the company’s wireless service and other income to grow even more after 2022. Verizon thinks this revenue will grow by at least 3% in 2022 and at least 4% in 2024.
The company’s growth thanks to 5G and its strong momentum going into 2022 are good reasons to invest. This telecom stock is a good long-term investment. It has a steady track record of dividend increases and a reliable dividend that keeps going up. This helps protect against inflation.
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Is Verizon a Good Stock to Buy Right now?
The IBD Stock Checkup says that VZ stock has a Relative Strength Rating of 79 out of 99. Most of the best stocks have an RS score of 80 or more.
IBD Stock Checkup says that Verizon stock has an IBD Composite Rating of 73 out of 99. IBD’s Composite Rating combines five different proprietary ratings into a single rating that is easy to understand and use. Stocks with a Composite Rating of 90 or higher are the best for growth.
The Accumulation/Distribution Rating for Verizon stock is D. This rating looks at how stock price and volume have changed over the past 13 weeks. The rating on a scale from A+ to E shows how much institutional investors buy and sell a stock. A+ means that institutions are buying a lot, and E means selling a lot. Think of a C as being in the middle.
The price of Verizon stock is higher than the 50-day moving average. As of the start of trading on July 5, 52.28 is the entry point for VZ stock. The price of Verizon stock is about 1% below the entry point.
Investors could also look at other 5G stocks, like companies making chips or selling network gear.
Meanwhile, it could take years for new 5G wireless apps to bring in a lot of money. If you want to make money, you might buy a large ETF like SPY, which tracks the S&P 500, instead of Verizon stock.
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What is Verizon a Good Stock to buy with Good Stock Dividend?
One of the best things about Verizon is its dividend. It has a 4.93% yield in 2022. Verizon has shown that it is one of the most dependable dividend stocks.
When the pandemic’s effects caused some companies, like Ford Motor Company, to cut or get rid of dividends, Verizon kept up its 15-year streak of increasing dividends. Even though stores had to close because of the pandemic, this consistency stayed the same. As a result, sales in 2020 will be $128.3 billion less than in 2019, which was $131.9 billion.
Verizon’s dividend is safe because the company can always make money without spending it. Even though Verizon’s sales were lower in 2020, the company ended the year with $23.6 billion in free cash flow. A 32.4% increase from 2019. By the end of the third quarter of 2021, Verizon had a free cash flow of $17.3 billion.
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Verizon Stock Company
One of Verizon’s strengths is that it always makes free cash flow. In 2021, the company did very well in several important ways, even better than in 2020 and in 2019 before the pandemic.
For example, Verizon’s revenue for the first three quarters of 2021 was $99.5 billion. This is from $93.6 billion in 2020 to $97.1 billion in 2019. Verizon got more customers even though the U.S. telecom market is very competitive, and other companies, like AT&T, are also doing well.
The company gained 699,000 postpaid wireless customers in the third quarter. It is the most valuable type of customer in the telecom industry. This increase exceeds the previous year’s number of 553,000. It is also higher than the 2019 number of 601,000.
Verizon combines this good performance with good money management.
In 2020, when the pandemic hit and lockdowns started, Verizon moved quickly to stock up on cash. At the end of 2020, it had $22.2 billion in cash and other assets, up from $2.6 billion at the end of 2019.
Verizon’s financial management now focuses on balancing paying dividends and investing in its business. They also focus on paying down its debt, which grew when it spent $52.9 billion at a government auction. They spent this to buy more wireless spectrum for its 5G network in the first quarter of 2021.
Should you put $1,000 right now into Verizon Communications Inc.?
Before you think about working with Verizon Communications Inc., you should know this. It is also important when you are trying to figure out is Verizon a good stock to buy. The award-winning stock analysts just told investors the 10 best stocks to buy. Verizon Communications Inc. wasn’t one of them.
Motley Fool Stock Advisor, an online investing service they’ve been running for 20 years, has done three times better than the stock market. And they think there are 10 better stocks to buy right now.
As of the start of trading on July 5, Verizon Communications (VZ) shares are only down slightly in 2022. Some technical assessments of Verizon stock have gotten better. And VZ stock has come back and is now close to its 200-day moving average.
The stock of VZ fell after the telecom giant reported its earnings for the first quarter and lowered its predictions for the rest of the year.
In a report, Credit Suisse analyst Douglas Mitchelson said, “Verizon is affected by increased competition in consumer wireless. Despite aggressive promotions, they are likely to see a drop in customers. All this while, the industry is still growing almost as fast as it did in Q2 2021 when it was too hot.
The mid-band radio spectrum that VZ bought for 5G wireless services is a risk for its stock. At a government auction, Verizon stock sold for $53 billion. This amount included payments to satellite operators as an incentive and clearing costs. The buy of mid-band spectrum for 5G services will put off a buyback of VZ stock.
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What is the deal between VZ and Tracfone?
To answer the question is Verizon a good stock to buy, you should know its deal with Tracfone. In May 2021, VZ stock sold Apollo Global Management a $5 billion stake in its media and advertising business. This made up 90% of the business.
In November, Verizon finally closed the $6.25 billion deal to buy Tracfone from Mexico-based America Movil. This was a good thing (AMX). Tracfone sells wireless services that are already paid for.
One problem for Verizon stock is that the 5G wireless competition is likely to get tougher. Cable TV companies are putting out a lot of new deals with aggressive prices. When T-Mobile US bought Sprint, it made a stronger competitor. AT&T has also agreed to combine its WarnerMedia business with Discovery (DISCA).
Due to this, a trimmed-down AT&T should have more money to invest in 5G wireless technology and fiber-optic services.
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Is 5G Sales good Enough to Boost Verizon Stock?
Building out its network will be very important now that Verizon has enough 5G mid-band spectrum. Verizon wants to reach 175 million people by the end of 2022 with faster 5G services that use the mid-band spectrum. This is important in figuring out the question, “ Is Verizon a good stock to buy”.
Also, Verizon plans to send fixed broadband services to homes using the 5G mid-band spectrum. At the moment, cable TV companies are the leaders in home broadband. The telecom company said that by the end of 2023, its fixed broadband service would be available in 30 million homes.
Verizon thinks 5G business services will start picking up steam in 2022. Also, it is putting money into sites called “mobile-edge compute” that offer private 5G business services.
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VZ Stock New Management
Since the global recession of 2008-2009, Verizon stock has had some good runs because interest rates have been low. At one point, the telecom giant jumped to the top of the IBD Leaderboard. It is a list of the best stocks based on both technical and fundamental measures.
Verizon has a bigger stake in the U.S. wireless market than its competitor AT&T. Verizon’s wireless business brings in close to 85% of its earnings after taxes. Since it bought Vodafone Group’s (VOD) 45% stake in a wireless joint venture for $130 billion.
Also, its top leaders are all new. Hans Vestberg was the CEO of Ericsson (ERICY), a company that made network equipment before he joined Verizon. Vestberg and Rima Qureshi, who were also with Ericsson for a long time, joined Verizon in 2017.
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Summary
We hope we have answered the question- Is Verizon a good stock to buy. Low-band and high-frequency airwaves are usually seen in Verizon’s 5G mobile network. It has a lot of lower-band 5G services, but they don’t improve data speeds much over older 4G networks.
High frequency, mmWave spectrum is in Verizon’s 5G “Ultrawideband,” or UWB, mobile services. Verizon is working with Amazon Web Services, Amazon.com’s (AMZN) cloud computing division. They are working together to make 5G apps for industrial devices that connect to the internet. IBM is another partner (IBM).
Experts think that 5G wireless will be later used in manufacturing automation, cloud gaming, and self-driving cars. Drones, and health care services are not excluded.
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FAQ
Yes. Stocks with a Composite Rating of 90 or higher are the best ones for growth. However, don’t forget you won’t make so much money from it right now.
Adjusted earnings per share for 2022 will be between $5.40 and $5.55. At the end of trading on Thursday, Verizon stock had gained 8.4%, including dividends, while the S&P 500 had lost 7.4%. The dividend yield on the stock is 4.7% per year.
Verizon thinks this revenue will grow by at least 3% in 2022 and at least 4% in 2024. The company’s growth thanks to 5G and its strong momentum going into 2022 are both good reasons to invest.
The median price target for Verizon Communications Inc. over the next 12 months from 22 analysts is $57.00, with a high of $71.00 and a low of $49.30. The last price was 50.75, 12.32 percent more than the median estimate.
Yes. At the end of 2021, he owned nearly 159 million Verizon shares worth $8.3 billion. The stake was worth $9.4 billion, about $59 per share.
The analyst at Morningstar thinks that the company will have consistent results over time. It also thinks that the stock is very much undervalued.
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References
- investors.com– Verizon Stock- Buy Now
- fool.com– Is Verizon a good Stock to buy now
- fool.com– Reasons why Verizon stock is a buy
- zacks.com– Is Verizon a good stock to buy now
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