Key insights
- The article highlights Verizon Communications (VZ) as an attractive dividend-paying stock, noting its consistent 6% yield and 20-year history of payout increases, with a recent 2.5% hike. Despite modest growth, its 67% payout ratio suggests room for further increases. The stock is presented as a defensive play, offering stability regardless of economic conditions, contrasting with potentially more volatile fast-growing stocks. This focus on stable income and defensive characteristics could appeal to investors seeking lower volatility in uncertain economic environments.
It's hard to find more attractive investments than healthy dividend-paying stocks, because they offer a win-win-win proposition: Over time their stock prices should rise, plus they pay dividends to shareholders regularly, plus those dividends tend to be increased over time, too.
That's a winning combination! Note, too, that these dividend payments tend to keep being made no matter whether the economy is booming or ailing. Here, then, is one attractive dividend payer to consider: Verizon Communications (VZ 0.86%).
Let's start with Verizon's dividend, because it may be the most compelling thing about the stock. It recently yielded a hefty 6%. It's also a growing dividend, though it hasn't been growing super briskly. Over the past five years, for example, it has increased at an average annual rate of 2.4%. The most recent increase, announced in February, was a 2.5% hike.
That modest growth rate may be disappointing, but remember that while other dividend payers may yield, say, 3.5% and be hiking their payouts rapidly, it can still take a while to get to Verizon's current yield of 6%. And Verizon has been upping its payout for 20 consecutive years. Better still, its payout ratio was recently around 67%, meaning that it's only paying out about 67% of its earnings in dividends, leaving plenty of room for further growth.
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Here are some more reasons, beyond its dividend yield, to consider Verizon Communications for your portfolio:
Verizon stock isn't for everyone. If you favor fast-growing stocks, look elsewhere. But fast growers can fall harder in market downturns, and in some years, they may not grow much. Verizon delivers 6% no matter whether the market is up or down.
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Its stock price will likely grow over time, too. Over the past decade, it averaged 3.2% annual growth, and over the past 15 years, 5.9%. Over the past three years, it's been growing more briskly, averaging 14.8%. So give this stock, and other compelling dividend payers, some consideration.