Verizon Communications (NYSE:VZ) hasn't been having a great year. Its shares are down 15% thus far and the company's second-quarter earnings fell short of expectations. The company's CEO admitted that the performance was not as strong as management had expected, and as a result, Verizon reduced its guidance for the full year.
However, as bad as that sounds, it doesn't amount to a significant financial impact for the business. Instead of generating between 9% and 10% revenue growth, the company is now projecting its wireless service revenue to rise between 8.5% and 9.5%. And its adjusted earnings per share of $1.31 barely missed analyst expectations of $1.32. The business' financials remain fairly consistent and last quarter's free cash flow totaled $5.7 billion – far more than the $2.7 billion in dividends it paid out during the period.
The dividend still looks safe and the benefit for investors is that with shares of Verizon falling, the yield is now up to an incredible 5.7%. By comparison, the S&P 500 averages a yield that's around just 1.5%. Investors could be earning nearly four times more revenue from the telecom giant.
Verizon may not have had a great quarter in Q2 but its business did increase prices earlier this year. And the last quarter would have only begun to start feeling the effects of the busy travel season; Q3, which will include July through September, could be much better as travel picks up and mobile data usage is up.
At this high of a yield, it may only be a matter of time before income investors scoop up Verizon as the stock still looks like a great buy.
