The great benefit of owning a high-yield dividend stock is that it doesn't take much to reach an important milestone with its payouts. That's one of the numerous attractions of Verizon Communications' (NYSE: VZ) shares, which currently have a yield that tips the scales at over 6%.
As even the greenest income investor would admit, though, a lofty yield number isn't everything. We need to consider whether a high-yield dividend stock has other features that make it attractive. Here's my take on whether Verizon is such an investment.
It doesn't take much to get there
To get the headline's question out of the way, Verizon pays $0.6775 per share each quarter ($2.71 per year) in dividends. To earn $1,000 in dividend income from Verizon, you'd need to own 369 shares.
What you would get with that pile of stock, in my view, is quite a solid company. We're in an age where the average person simply can't live without devices, particularly smartphones. Think of it, have you recently been in any public environment where no one is glancing at their iPhone or Galaxy or Pixel?
Even though nearly every person of means in the U.S. has at least a smartphone, Verizon still manages to grow its business. In its most recently reported quarter, the company's revenue rose by nearly 2% year over year, impressive given the size of the business and the high penetration of such devices. Its tally of postpaid mobile and broadband subscribers grew by a cool 1 million, meanwhile.
Better times ahead
Another reason to be cheerful is that Verizon's massive build-out of 5G infrastructure, which dampened profitability and weighed down the balance sheet, is winding down. The company's moving past that phase now, and happily, such next-generation services are keeping it sharply competitive.
It says something for management's abilities that the company continues to find ways to squeeze out growth. Even without improving numbers, it's an incumbent to be reckoned with, and a reliable payer of a high-yield dividend. Therefore, I'd say the stock is a clear buy.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.
