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Legendary Investor Bill Miller's Fund Is Loading Up on This 6.3%-Yielding Dividend Stock. Here's Why I Plan to Buy More of It, Too.
VZVerizon(VZ) The Motley Fool·2025-06-01 08:46

Core Viewpoint - Bill Miller, founder of Miller Value Partners, has a history of outperforming the S&P 500 and has recently initiated a significant position in Verizon Communications, reflecting a strategic shift in the portfolio towards value stocks in the telecommunications sector [1][2][4]. Company Overview - Miller Value Partners' investment portfolio consists of 34 stocks, with Verizon being the largest new holding added in the first quarter of 2025, amounting to 198,000 shares valued at 8.98million[2][4][5].−Verizon′smarketcapitalizationisapproximately8.98 million [2][4][5]. - Verizon's market capitalization is approximately 183 billion, and the new stake represents 4.09% of Miller Value Partners' total portfolio [5]. Financial Performance - Verizon's forward price-to-earnings ratio is 9.2, significantly lower than AT&T's 13.4, indicating a more attractive valuation [6]. - The company reported a wireless service revenue of 20.8billioninthefirstquarter,showingyear−over−yeargrowthinbothrevenueandearnings[7].−Verizon′sadjustedEBITDAreacheditshighestlevelever,withthestrongestgrowthrateinnearlyfouryears[7].GrowthProspects−VerizonanticipatesclosingitsacquisitionofFrontierCommunicationsinearly2026,whichcouldfurtherenhanceitsgrowthtrajectory[8].−Thecompanyhasdemonstratedastrongfreecashflowincrease,risingto20.8 billion in the first quarter, showing year-over-year growth in both revenue and earnings [7]. - Verizon's adjusted EBITDA reached its highest level ever, with the strongest growth rate in nearly four years [7]. Growth Prospects - Verizon anticipates closing its acquisition of Frontier Communications in early 2026, which could further enhance its growth trajectory [8]. - The company has demonstrated a strong free cash flow increase, rising to 3.6 billion in Q1 2025 from 2.7billioninthepreviousyear[9].DividendPolicy−Verizonhasincreaseditsdividendpayoutfor18consecutiveyears,indicatingacommitmenttoreturningvaluetoshareholders[9].−Thecompany′sfinancialhealthsupportsthecontinuationofthisdividendgrowth,withaclearpathwayformeaningfuldebtreductionaheadoftheFrontieracquisition[12].DebtManagement−Verizon′snetunsecureddebtstoodat2.7 billion in the previous year [9]. Dividend Policy - Verizon has increased its dividend payout for 18 consecutive years, indicating a commitment to returning value to shareholders [9]. - The company's financial health supports the continuation of this dividend growth, with a clear pathway for meaningful debt reduction ahead of the Frontier acquisition [12]. Debt Management - Verizon's net unsecured debt stood at 115.1 billion at the end of Q1 2025, which is $11 billion lower than the previous year [11][12]. - The company's net unsecured debt to consolidated adjusted EBITDA has improved year-over-year, suggesting better debt management [12].