Is Verizon's 6.2%-Yielding Dividend Too Good to Be True?

Verizon Communications (NYSE: VZ) is a leading telecommunications company in the country. It has offered a robust yield for multiple years now. While the S&P 500 average has a yield of only 1.1%, Verizon's stock yields a staggering 6.2%. This is even as the stock recently benefited from a rally after reporting earnings.

Could this be one of the better dividend stocks to buy on the S&P 500, or is Verizon's payout overdue for a cut?

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Did recent earnings numbers put concerns about the dividend to rest?

Last week, Verizon released its year-end results for 2025, and it did so with a bang. The company says it not only met its guidance for the full year but also generated its highest rate of net adds since 2019 during the most recent quarter. Net additions, or net adds, are a key metric that shows how well the business is growing and how many customers it's adding.

The strong finish to the year has given investors some renewed confidence about the telecom stock, which rose by 12% the day that its earnings numbers came out. This is even despite the company's operating revenue for the full year coming in at $138.2 billion -- a modest 2.5% increase from the previous year.

Earlier in January, the company also announced the completion of Frontier Communications, which strengthens its fiber network and opens up more growth opportunities in the future.

Can you count on Verizon's dividend?

The key number for investors to focus on when evaluating the dividend is free cash flow. That tells you how much money the company is bringing in and how much is available to use, after factoring in capital expenditures.

This past year, Verizon's free cash flow totaled $20.1 billion (versus $19.8 billion in the previous year). That's a healthy total given that the company pays out around $11.6 billion in dividends over the course of a full year. That gives the company plenty of a buffer to invest in its growth while also paying its shareholders a dividend on a regular basis.

For the current year, the company forecasts that its adjusted earnings per share will rise between 4% and 5%, which should put to rest any near-term concerns about its dividend. Verizon's payout looks safe, and with the company's growth also being strong and more opportunities ahead with the acquisition of Frontier now complete, this could be among the best all-around telecom stocks to buy today.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.