With a 6% Yield, Is Verizon Stock a Buy as Turnaround Continues?

Verizon Communications (NYSE: VZ) once again showed that its earlier strategy shift of becoming more customer-focused than technology-centric is paying off when it reported its second-quarter results. With a 6% yield and the company starting to see solid momentum, it looks like one of the most attractive high-yield stocks in the market today.

The turnaround continues

One of the big reasons for Verizon's strategy shift was to help reduce churn and start adding new customers. That once again showed up in the quarter, as the wireless carrier added 184,000 postpaid phone subscriptions. This was its best quarter for postpaid phone additions in five years.

Verizon also had 348,000 broadband net additions, including 193,000 fixed wireless subscriptions and 155,000 fiber households. Consumer post-paid churn, meanwhile, dropped to 84 basis points, its second straight quarter of sequential improvement.

Overall revenue fell by 0.7% year over year to $34.3 billion, although this was due to a 20% decline in equipment revenue. The decline in equipment revenue was due to the company reducing spending on device subsidies. Service revenue, meanwhile, rose 3.5% to $29.2 billion.

Consumer revenue fell by 1.5% year over year to $26.2 billion, with service revenue up 3.3%. The company's business unit was solid, with revenue up by 2.6% year over year to $7.2 billion. Overall adjusted earnings per share (EPS) jumped 6.6% to $1.30, while earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped 7.2% to $13.7 billion.

Looking ahead, Verizon continues to project that it will hit the high end of its prior guidance of adding between 750,000 and 1 million postpaid phone subscribers for 2026. It upped the lower end of its full-year mobility and broadband service revenue guidance, now expecting it to rise between 2.5% to 3%, up from an earlier outlook of 2% to 3%. The telecom giant also raised its adjusted EPS guidance slightly, from a range of $4.95 to $4.99 to a new range of $4.99 to $5.04, representing 6% to 7% growth.

Image source: The Motley Fool.

Time to buy the stock

Verizon's stock fell back earlier this year on fears about Space Exploration Technologies (SpaceX) potentially disrupting the wireless industry. However, given technology and regulation constraints, that looks unlikely unless SpaceX buys a rival mobile carrier. Meanwhile, Verizon is showing that its new customer-focused strategy is paying off with strong retention and increasing customer additions.

At the same time, the company looks prepared to ride some nice tailwinds. The first is that the industry is starting to move away from large subsidies, which should help improve gross margins and help drive profitability and cash flow growth. The second is that Verizon has a big bundling opportunity now that it has closed its acquisition of Frontier, one of the largest fiber providers in the U.S. Only about a fifth of Frontier customers have both wireless and broadband subscriptions, so this should be a sizable growth driver in the coming years.

Verizon also just announced a $1 billion deal with Alphabet, where the search and cloud giant will use Verizon's dark fiber to connect its data centers. Best of all, the company indicated that this is likely the first of many of these types of deals. Dark fiber is unused fiber optic cables, and Verizon providing both dark and lit fiber to AI data centers is another big potential opportunity.

Of course, the biggest reason most investors own Verizon stock is its dividend and high yield. The dividend continues to look very secure, with the telecom's unsecured leverage (net unsecured net/adjusted EBITDA) at 2.5 times, and it's set to generate massive free cash flow this year that will easily cover its dividend.

With a forward price-to-earnings (P/E) ratio of just 9.5 based on 2026 earnings estimates, a well-covered and growing dividend, and solid earnings growth opportunities, Verizon is a top dividend stock to buy now.

Geoffrey Seiler has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.