Verizon's (VZ) high dividend yield, along with its low valuation, high profits, solid dividend coverage, and growth, makes it a good name to consider for conservative income investors. The firm's recently announced layoffs should lift its bottom line, while its overall results should not be meaningfully negatively affected by the advent of direct-to-device cellular service or the proliferation of satellite-internet service.
And while the firm recently was booted out of the Dow Jones Industrial Index ($DOWI), most of the impact from the latter development is likely already reflected in the stock.
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High Dividend Yield, Low Valuation, High Profits, and Solid Dividend Coverage
VZ currently has an impressive dividend yield of 6.6% and a very low price-earnings ratio of 8.85x. What's more, in the first quarter, its net income rose 3.3% versus the same period a year earlier to $5.1 billion. Unsurprisingly, given its high profits, its dividend is widely considered to be well-covered. In fact, its 2025 operating cash flow of $37.1 billion was about 3.2 times higher than its dividend costs of $11.48 billion, while its free cash flow was 1.75 times above the dividend payout. What's more, Barron's last month called the dividend yield “solid.”
Verizon Is Growing, and Layoffs Should Lift the Bottom Line
In Q1, the firm's operating revenue rose 2.9% versus the same period a year earlier, while it added 55,000 postpaid net phone customers versus Q4 and increased its postpaid subscriber net total by more than 340,000 year-over-year.
On July 14, Barron's reported that the firm planned to lay off additional workers. The report comes after Verizon parted ways with 13,000 workers in November and implemented “a smaller round of layoffs in May,” according to Seeking Alpha. As of the end of 2025, the telecom giant had nearly 90,000 workers.
Its CEO, Daniel Schuman, has said that it would look to reduce its costs by $5 billion this year. In addition to further boosting the company's bottom line, the cost-cutting will make its dividend even more secure. Verizon, which had raised its payout for 19 straight years as of last September, is likely to continue to lift the dividend going forward.
D2D and the Dow Jones Issue Are Not Big Threats
As I noted in a recent column on T-Mobile (TMUS), “many… D2D providers are actually looking to partner with carriers rather than replace them—and for important logistical reasons, that strategy is unlikely to change for the foreseeable future.” Specifically, I asserted that “Because it would be tremendously costly and time-consuming for D2D companies to acquire and maintain stores, hire salespeople, and obtain customers on their own, in my view these firms are likely to keep partnering with mobile carriers… for the foreseeable future.” Consequently, VZ, like TMUS, is unlikely to be challenged by D2D for at least several years.
Further, the proliferation of satellite broadband is unlikely to hurt Verizon much because it only had 16. 8 million "fixed wireless access and fiber broadband connections" as of the end of Q1, versus 146.8 million “total wireless retail connections,” according to its website.
Verizon's exclusion from the Dow was disclosed on June 23 and carried out on June 29, so investors and ETFs have already had a few weeks to adjust their allocations accordingly. Consequently, this development should not affect the shares a great deal going forward.
On the date of publication, Larry Ramer did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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