The market has taken a pounding for days, almost exclusively because of the global spread of the coronavirus. There are several cases in the United States, and the Centers for Disease Control and Prevention (CDC) says there will be more. Investors have started to look for safe-haven stocks. They need to be, among other things, companies that do business in the United States, companies not tethered to revenue that might drop if the virus spreads across America, and companies with rock-solid balance sheets and bond-like yields.
The publicly traded corporation at the top of this list is Verizon Communications Inc. (NYSE: VZ). Almost all of its telecom business is America based. It is the largest wireless operator in the United States, with 155 million customers. It also has a huge landline business. Its earnings are not threatened by media holdings, as AT&T’s are. AT&T owns the Warner assets, which came with its buyout of Time Warner. Verizon’s common stock yields 4.3%.
That Verizon has paid a dividend every year since it was formed in 2000 demonstrates its balance sheet strength.
Verizon underperformed the Dow Jones industrials for most of the past year. That has changed in the past few days. Verizon is down 4.56%, while the Dow is off 5.54%.
There are still some high flyers in the index. This is particularly true of large tech stocks. Intel Corp. (NASDAQ: INTC), for example, is up 12.93%. However, its yield is only 2.21%, and its chip business has overseas risks.
Verizon’s strength, compared to most other mega-cap stocks, could improve if the virus spreads in the United States. People may become isolated from one another if locations like schools or stores are closed. This becomes an even larger issue if some Americans are forced to stay at home.
Verizon also has a strong near-term future. The rollout of ultrafast 5G will mean many subscribers will upgrade to the service, which will allow Verizon to raise prices.
As the grip of the virus spreads, Verizon’s business is in a safe position.
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