Chasing 6%-yielders with single-digit price-to-earnings (P/E) ratios can be ultra-risky, especially if you pay less attention to how the business behind the stock is actually faring. Further, it can be rather tricky for a new investor with a limited risk tolerance (let’s say a Baby Boomer who’s winding down for retirement) to tell the difference between a shining value opportunity and a trap.

That said, if you spot a firm that has a turnaround plan you can get behind, perhaps the high-yielder is worth pursuing, provided you’re willing to ride out what could be a somewhat choppy ride.

In this piece, we’ll look at shares of hard-hit telecom Verizon (NYSE:VZ), which currently commands a nice 6.2%-yielding dividend yield. Moreover, the name has also won the confidence of some in the analyst community, given its recent performance.

Key Points About This Article

• Verizon stock looks like a great buy as its rally progresses.
• There’s more to love than just the 6.2% dividend yield!
• If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.

Verizon stock hasn’t looked this timely in a long time!

Aside from having a modest valuation (shares currently trade at 9.29 times forward P/E) and one of the most generous dividend yields on the market, VZ shares look rather timely from a technical perspective, with a potential head-and-shoulders bottom pattern that may just be in the works following its big September breakout to around $44 per share.

Of course, the technical picture should not be the sole reason to invest in a stock. That said, if you’re a fan of the yield, the valuation, and the technical backdrop just so happens to signal timely gains ahead, you may have a name worth pulling the trigger on.

Verizon is a former Warren Buffett stock (he wisely sold out of his position just over two years ago) that crashed more than 50% from its 2019 peak to its eventual 2023 trough.

Of late, things have been looking up for shares of the telecom titan, which is up close to 13% on the year. On such strength, the 6.2% yielder remains attractive, but what’s even more enticing, in my opinion, is the forward-looking trajectory.

Verizon gets a big Wall Street upgrade.

Recently, Verizon and its telecom peers received a significant upgrade from Oppenheimer Asset Management. Notably, they were big fans of the September breakout and the technical pathway toward $49 per share (up more than 11% from current levels). Indeed, Verizon stock’s recent ricochet may have legs.

The company now has a few decent quarters under its belt and an opportunity to keep bringing on new customers via streaming bundling opportunities. Additionally, Verizon’s new managers have been actively (and aggressively) investing in efforts to enhance its 5G network.

Indeed, the 5G rollout — a now-aged but still very relevant tailwind — remains a long-term upside catalyst for the firm as demand for top-of-the-line wireless connectivity is likely to surge even higher. Specifically, as we use more data-intensive applications (think Meta Platforms’ (NASDAQ:META) smart glasses and data-hungry next-generation AI models like ChatGPT-5), many of us may find the need to upgrade our data plans.

Verizon’s hiked dividend is worth getting behind.

Perhaps the most significant vote of confidence in the firm’s medium-term future was given by management when it chose to increase its dividend just over a month ago. The company increased its already sizeable dividend by 1.25%, marking the 18th consecutive year the telecom increased its payout.

Sure, the latest hike was modest, but it is a sign that the firm has the financial flexibility to balance capital-intensive projects and spoiling shareholders.

As rates fall off and Verizon brings on more new customer additions, expect the magnitude of annual dividend hikes to get larger, perhaps closer to the mid-single-digits. In any case, there seem to be two “main attractions” to the stock right here: the dividend and its newfound momentum, which could extend into year’s end.

The bottom line

Of all the dividend plays yielding more than 6%, it’s tough to find one as opportunistic as Verizon in this environment. As more Wall Street analysts warm up to the name, perhaps the stock is well on its way to becoming a dividend darling once again after losing its way in recent years.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.