Telecom & Wireless

Verizon Is Top Dow Performer in 2016

Douglas A. McIntyre

Published: February 15, 2016 9:55 am

Last Updated: January 13, 2020 1:11 pm

The Dow Jones Industrial Average is off 8.33% to 15,973.84, one of its worst starts in memory. A small handful of stocks in the index are up this year, with Verizon Communications Inc. (NYSE: VZ) first among them, trading higher by 8.42% to $50.11

The increase is not new to 2016. Verizon trades very near its 52-week high of $51.20, against at 52-week low of $38.06. Its primary rival, AT&T Inc. (NYSE: T), trades near the top of its range as well.

Among the reasons for Verizon’s performance is its 4.51% yield. It has a rock solid balance sheet and is in businesses that have wide moats. Some of the other largest dividend stocks are energy giants, and low oil prices threaten their ability to pay out consistently.

Verizon has three primary businesses. One is its ancient landline business, which cellular phones and broadband-based phones have deeply injured. However, Verizon has kept the sector profitable, despite the shrinkage.

Verizon has the largest cellular subscriber base in the United States. AT&T can challenge the count, but the two other participants in the business, T-Mobile US Inc. (NASDAQ: TMUS) and Sprint Corp. (NYSE: S) cannot come even close. Sprint in particular seems to be in a death spiral.

And Verizon has laid siege to the cable and satellite TV businesses with its fiber to the home operations, called FiOS. It has the capacity to bundle the service with cellular and television, which puts it in an enviable position.

Verizon is the top performer in the Dow this year. Given the general business environment and the other Dow components, it could keep that lead all year long.