Verizon's 6.8%-Yielding Dividend Continues to Grow Safer

Financial Performance and Dividend Safety - Verizon's dividend yield is 6.8%, one of the highest in the S&P 500, and is considered very safe due to strong financial results and outlook [1] - Total revenue increased by 0.6% to $134.8 billion in 2024, driven by a 3.1% increase in wireless service revenue [2] - Cash flow from operations was $36.9 billion in 2024, down from $37.5 billion in 2023, but free cash flow increased to $19.8 billion from $18.7 billion due to lower capital spending [3] - The company's net leverage ratio improved to 2.3 times at the end of 2024, down from 2.6 times in 2023, supporting its solid investment-grade bond ratings [4] - Verizon's free cash flow of $19.8 billion in 2024 more than covered its dividend outlay of $11.2 billion, making the dividend increasingly safe [4][12] Growth Drivers and Future Outlook - Verizon expects wireless service revenue to grow by 2% to 2.8% in 2025, with adjusted EBITDA rising 2% to 3.5% [5] - Adjusted earnings per share are expected to range from flat to up 3% in 2025, an improvement from the 2.5% decline in 2024 [5] - The company plans to increase capital spending to $17.5 billion-$18.5 billion in 2025 to support wireless, broadband, and AI infrastructure expansion [6] - Verizon anticipates generating $17.5 billion-$18.5 billion in free cash flow in 2025, which will easily cover its dividend and strengthen its balance sheet [6] - The company's acquisition of Frontier Communications for $20 billion is expected to enhance its fiber network and generate at least $500 million in annual cost synergies, though the deal may not close until 2026 [7][8] Strategic Investments and Market Opportunities - Verizon has heavily invested in expanding its wireless and broadband networks, positioning it for continued growth beyond 2025 [7] - The company sees a robust market opportunity in AI, with a total addressable market of over $40 billion for telecom AI delivery and more than $1 billion in short-term business leveraging existing infrastructure [9] - Verizon's investments in 5G and broadband networks are driving growth, enabling the company to produce significant cash flow, invest in future growth, and increase its dividend [12] Dividend Growth and Industry Position - Verizon raised its dividend for the 18th consecutive year in 2024, the longest current streak in the U.S. telecom sector [10] - The company's high-yielding dividend is increasingly secure, making it an attractive option for investors seeking passive income [11][12]