Smart Dividend Portfolio Edition #59: Connectivity Capital
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Dear Investor,
Welcome to the 59th edition of TipRanks’ Smart Dividend Portfolio & Newsletter.
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Market-Moving News: May 05, 2025
Stocks rose for a second straight week, with the S&P 500 (SPX) gaining 2.92%, the Dow Jones Industrial Average (DJIA) ending the week with a gain of 3%, up 3%, and the tech-heavy Nasdaq-100 (NDX) surging 3.45%.
The S&P 500 notched its longest daily rally in over two decades, driven by robust tech earnings, progress in tariff negotiations, and continued strength in the job market. The benchmark index liberated itself from all of the tariff-related losses it had suffered since April 2, aka “Liberation Day.” It also marked the first back-to-back weekly gains of over 2% since October 2022 and posted a record-setting nine-day rally, totaling a 10.2% gain. Still, all major indexes remain negative year-to-date.
The two main forces that had pressured stocks – tariff uncertainty and concerns about the sustainability of the AI-led rally – began to ease, at least for now. The Q1 earnings season has been by-and-large positive, with over 75% of reporting S&P 500 companies beating EPS estimates.
With more than 70% of constituents now reported, earnings surprises have spanned sectors, led by Health Care. Yet, investor focus has squarely been on Big Tech. Microsoft and Meta Platforms reignited investor optimism last week, beating expectations and, more importantly, issuing bullish guidance while maintaining aggressive AI-related capex plans. That momentum lifted a broad range of AI hardware and infrastructure stocks, as well as adjacent plays like power producers and electronics suppliers.
This optimism from pure-play tech giants overshadowed signs of trouble in the outlooks of more consumer-facing companies such as Apple and Amazon, both already feeling the impact of the trade spat with China and bracing for an impending consumer pullback amid an economic slowdown. They join a growing list of retailers and consumer goods firms slashing or withdrawing guidance, citing rising costs from tariffs and weakening demand.
Although the worst of the tariff uncertainty seems to be behind us, with the markets apparently making peace with a new tariff regime, the impacts of the Trump administration’s trade policies on the U.S. economy are just beginning to trickle in.
As opposed to stock markets, the economy is a slow-moving machine, and working through higher costs like tariffs will take time. Although the unexpected Q1 2025 GDP contraction shook sentiment, it was the result of companies front-loading orders ahead of anticipated tariffs and is expected to be reversed in the second quarter. Meanwhile, the economy’s underlying metrics remained sound, as confirmed by the stronger-than-expected April jobs report, with job gains at their strongest since May 2023.
While stock markets are increasingly optimistic about de-escalating trade tensions, consumers seem less convinced. Consumer sentiment fell in April for the fourth month in a row, reaching levels not seen since the pandemic era, as households brace for tariff-induced price increases. However, elevated consumer inflation expectations, coupled with the job market’s strength, may keep the Fed on hold longer as it weighs the impact of tariffs on growth and inflation.
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This Week’s Quality Dividend Stock Idea
Verizon Communications (VZ) is a U.S.-based telecommunications company specializing in wireless services, broadband, and business solutions. Its operations include a nationwide 5G network, fiber-optic internet, and enterprise offerings for corporations. VZ is one of the largest wireless carriers in the U.S. and a leading provider of digital infrastructure
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Telecom Titan
Verizon was established on June 30, 2000, through the merger of Bell Atlantic Corp. and GTE Corp., one of the largest mergers in U.S. history. This union created a global communications technology leader headquartered in New York City. The company’s origins trace back through decades of mergers, acquisitions, and divestitures, initially centered on wireline services.
In the early 2000s, Verizon invested heavily in its fiber-optic infrastructure, launching Verizon Fios in 2004. Fios delivered high-speed internet, becoming a cornerstone of Verizon’s broadband strategy. While it drove substantial growth in its early years, Fios experienced slower momentum and periods of stagnation in subscriber additions during the late 2010s. In response, Verizon shifted focus toward expanding fixed wireless access and optimizing its fiber footprint. These efforts, combined with renewed broadband demand in the 2020s, ultimately reinforced fiber optics as a key asset in Verizon’s infrastructure portfolio.
Verizon’s wireless division has expanded through strategic acquisitions, notably the 2021 purchase of TracFone, which strengthened its prepaid subscriber base and boosted wireless service revenue. This move solidified Verizon’s position in the competitive wireless market.
Starting in 2019, Verizon rolled out its 5G Ultra-Wideband network, leveraging high-frequency millimeter waves and eventually C-band spectrum. This network offers faster speeds and greater capacity than standard 5G and 4G long term evolution (LTE). A major milestone occurred in January 2022, when Verizon extended 5G Ultra-Wideband to over 100 million people across more than 1,700 U.S. cities.
Today, Verizon is a leading provider of communications, technology, information, and streaming products and services to consumers and businesses. With annual revenues of nearly $135 billion and a market capitalization of around $183 billion, Verizon is ranked #31 on the Fortune 500 list.
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Network Nexus
Verizon has executed a series of major mergers and acquisitions in the 21st century, particularly over the past decade, to bolster its position across wireless, broadband, and enterprise services. These transactions have played a pivotal role in expanding the company’s reach, capabilities, and financial performance.
In 2006, Verizon acquired MCI for $8.5 billion. This deal significantly enhanced Verizon’s long-distance and enterprise service offerings, marking a critical step in the company’s efforts to build a robust national and global network. In 2014, Verizon executed its largest deal to date, purchasing Vodafone’s 45% stake in Verizon Wireless for $130 billion. This resulted in the company gaining full ownership of its wireless business, enhancing its market dominance and providing greater financial flexibility.
Around three years later, the company further diversified its portfolio by acquiring Yahoo’s core internet assets for around $4.5 billion. Combined with the 2015 acquisition of AOL for $4.4 billion, these assets formed Oath, later rebranded as Verizon Media, bolstering Verizon’s digital advertising and content offerings. However, in 2021, the company sold Verizon Media to Apollo Global Management for $5 billion, roughly half the $9 billion originally invested, signaling a strategic pivot toward its core internet-provider businesses.
That same year, Verizon acquired TracFone Wireless for $6.25 billion, adding over 21 million subscribers and significantly expanding its prepaid wireless market share. This acquisition drove a notable increase in wireless service revenues. Most recently, in 2024, Verizon announced the $20 billion acquisition of Frontier Communications. The transaction still requires regulatory approvals and is expected to close by the first quarter of 2026. The deal is projected to be accretive to revenue and Adjusted EBITDA growth, delivering at least $500 million in annual run-rate cost synergies by the third year through enhanced scale, distribution, and network integration.
These strategic acquisitions have been instrumental in expanding Verizon’s subscriber base, broadband coverage, and enterprise solutions, aligning with its focus on 5G innovation and digital infrastructure.
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Connectivity Champion
Verizon drives its telecommunications dominance through a robust business model focused on wireless services, broadband, and enterprise solutions, organized into two core segments: Verizon Consumer Group and Verizon Business Group. In Q1 2025, the Consumer segment accounted for 76% of total revenue, the Business segment contributed 22%, and corporate functions, including device insurance and strategic investments, accounted for the rest.
The Consumer segment provides wireless and wireline services across the U.S., delivering fixed wireless access (FWA) broadband over 5G or 4G LTE and wireline services via Verizon Fios or copper lines in nine Mid-Atlantic and Northeastern states and Washington, D.C. Customers can select postpaid or prepaid plans and purchase devices like smartphones and tablets. The Business segment delivers wireless and wireline services, including FWA broadband, IoT, and managed network solutions, to businesses, public sector clients, and carriers.
In 2023, Verizon launched a multi-year consumer business transformation strategy to deepen customer relationships through value, simplicity, and innovation. This included a regional sales model with localized marketing and the introduction of myPlan and myHome, customizable mobile and home internet offerings. myPlan offers three unlimited plans with varied 5G and hotspot options, while myHome provides Fios, 5G Home, or LTE Home internet starting at $35 per month. A three-year price lock, free phone trade-in offers, and add-ons like the Verizon Visa Card drove double-digit gross add growth in April 2025. To boost retention, it launched the Access program, offering exclusive experiences and savings for bundled mobile and home service users.
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Growth Momentum
The prepaid business, bolstered by the TracFone acquisition, added 137,000 core retail customers in Q1 2025, reversing a 131,000-customer loss from the same period in the prior year. This customer churn is expected to normalize by the second half of 2025. In Q1 FY25, retail wireless churn stood at 1.57%, down slightly from 1.6% a year earlier. However, wireless retail postpaid and postpaid phone churn rose to 1.13% and 0.9%, up from 1.03% and 0.83%, respectively, primarily due to price hikes linked to inflation and rising operational costs. Verizon expects to sustain strong postpaid phone net additions through 2025, supported by migration from prepaid and partner-driven growth.
In broadband, Verizon continues to gain market share via FWA and fiber, aiming to cover over 100 million premises long term. FWA remains the key growth driver, with a goal of reaching 8 to 9 million subscribers by 2028. Its convergence strategy is working as most new broadband users are bundling broadband with mobility, cutting churn by 50% for fiber customers. This was evident in Q1 as broadband net adds reached 339,000, led by Fios and FWA, reinforcing market share gains.
The Frontier acquisition is expected to expand Verizon’s reach to 25 million premises across 31 states, with long-term plans for 35–40 million fiber passings. Fiber passings are the number of homes or businesses located close enough to fiber infrastructure, typically along main roads, such that they can be easily connected to fiber internet upon request.
Backed by a $17.5–$18.5 billion CapEx plan in FY25, VZ is focused on C-band, fiber, and IT, and expects to complete C-band deployment at 80%–90% of planned sites by year-end. With minimal tariff exposure due to its U.S.-centric operations, Verizon also won’t absorb significant tariff hikes on handsets, instead passing these costs to consumers.
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Financial Fortitude
Verizon has delivered modest but steady financial growth over the past five years, with revenue and adjusted EPS growing at a CAGR of 2.6% and 5.8%, respectively. This performance in a mature and competitive telecom market is stemming from robust wireless and broadband expansion, innovative customer retention strategies, and investments in emerging technologies. Verizon’s capital-light growth, fueled by strategic acquisitions and AI initiatives, supports its outlook for sustained financial health.
In Q1 FY25, Verizon reported operating revenue of $33.5 billion, a 1.5% year-over-year increase, surpassing analyst expectations. Adjusted EPS rose 3.5% to $1.19, also beating estimates, while adjusted EBITDA climbed 4% to $12.6 billion, the strongest year-over-year growth in nearly four years. These results were driven by cost discipline, including a voluntary separation program launched in June 2024 for U.S.-based management employees. The voluntary separation program offers select U.S. based management employees the option to leave the company voluntarily, typically in exchange for a severance package.
Wireless service revenue grew 2.7% to $20.8 billion, hitting the higher end of its guidance fueled by FWA expansion and premium plan adoption, such as myPlan and myHome.
The Consumer segment generated $25.6 billion in revenue, up 2.2% year-over-year, while the Business segment saw a 1.2% decline to $7.3 billion. Verizon’s operating margin improved to 23.8% from 22.8% in Q1 2024, reflecting operational efficiency. However, its debt-to-equity ratio of 1.67 remains above the telecom sector median of 0.7, indicating high leverage. Deleveraging efforts reduced total unsecured debt from $128.4 billion in Q1 2024 to $117.3 billion in Q1 2025, with the net unsecured debt-to-EBITDA ratio improving to 2.3 times. Debt redemptions, such as the Floating Rate Notes due May 2025, and planned asset sale proceeds aim to enhance financial flexibility. Verizon’s credit ratings remain solid, with ratings of “BBB+,” “Baa1” and “A-” from S&P, Moody’s, and Fitch, respectively, reflecting confidence in its stable operations.
For 2025, Verizon projects wireless service revenue growth of 2.0%–2.8% and adjusted EPS growth of 0%–3.0%, driven by 5G subscriber growth, broadband expansion, and the Frontier Communications acquisition to strengthen fiber infrastructure.
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Dividend Dynamo
Verizon has demonstrated a steadfast commitment to shareholder value through 18 consecutive years of quarterly dividend increases. In Q1 2025, the company maintained its quarterly dividend at $0.67 per share, reflecting confidence in its stable cash flows and operational resilience. With a dividend yield of approximately 6.4%, significantly higher than the telecom sector average of 2.1% and a sustainable payout ratio of 58%, Verizon offers a compelling income stream. Analysts expect modest dividend growth in 2025, supported by consistent earnings.
Complementing its dividend policy, Verizon actively pursues share repurchases under a 2020 authorization to buy back up to 100 million shares, which remains fully intact as no repurchases occurred in Q1 2025. This strategy is underpinned by robust free cash flow, which rose to $3.6 billion in Q1 2025 from $2.7 billion in Q1 2024, driven by disciplined cost management and operational efficiency.
Verizon’s financial strength is evident in its return on equity and return on assets, both ranking in the top 30% of the telecom industry, while its return on invested capital is among the top 40%. Shares of VZ have increased by 11% over the past year, reflecting its financial stability and appeal as a defensive, dividend-paying stock amid market uncertainty.
VZ is trading at a price-to-earnings ratio of 9.4x—at a 24.4% discount to the sector median of 12.2x and sits at the lower end of the range compared to its peers. VZ appears undervalued, with analysts projecting an upside of about 10% in the next 12 months, based on its 5G and broadband expansion. Some analysts are projecting a 29% upside at current levels. Furthermore, discounted cash flow models suggest that VZ stock is undervalued by around 30%, suggesting further upside.
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Investing Takeaway
Verizon stands out as a reliable income-generating investment for dividend-focused investors. With nearly two decades of uninterrupted dividend growth and a yield that significantly outpaces the telecom sector average, the company offers a compelling case for long-term, income-seeking portfolios. Its consistent cash flows, conservative payout ratio, and strong operational base, bolstered by 5G and broadband expansion, support ongoing dividend stability. Despite elevated debt, Verizon’s active deleveraging, robust free cash flow, and disciplined capital allocation help mitigate risk. Its defensive business model and undervalued stock price further enhance its appeal, especially during periods of market volatility. For investors prioritizing stable returns with the potential for moderate capital appreciation, Verizon remains a dependable choice in the telecom sector.
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Dividend Investor Portfolio
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Portfolio News
▣ ADP (ADP) reported fiscal Q3 revenue of $5.6 billion, up 6% year-over-year and slightly above the consensus estimates of $5.55 billion. Adjusted diluted EPS rose 6% to $3.06, beating estimates of $2.97. For FY25, ADP expects revenue growth of 6%–7% (vs. 6.43% consensus) and now sees adjusted EBIT margin expanding 40–50 basis points, up from the company’s prior guidance of 30–50 bps. It also raised its adjusted EPS growth outlook to 8%–9%, implying earnings of $9.96 at midpoint, compared to Street estimates of $9.94. In another development, ADP announced the appointment of Peter Hadley, ADP’s Treasurer, as CFO. Hadley will succeed Don McGuire, who has served as CFO since 2021.
▣ Amgen (AMGN) posted strong Q1 results, with revenue up 9% year-over-year to $8.1 billion, slightly topping estimates, and adjusted EPS jumping 24% to $4.90, well above the $4.27 consensus. The company reported double-digit year-over-year growth for 14 products in Q1, including Repatha, Blincyto, Tezspire, Evenity, Tavneos, and Uplinza. Sales of its top-selling osteoporosis drug, Prolia, rose 10% to about $1.1 billion. For FY25, it forecasts adjusted EPS of $20 on $35 billion in revenue at midpoint, compared to analyst estimates of $20.63 and $35.1 billion.
▣ BlackRock’s (BLK) iShares Bitcoin Trust (IBIT) has attracted over $43 billion in inflows recently, with more than $3.4 billion added between April 14 and May 1, leading all ETFs during that period. The surge reflects growing investor interest in Bitcoin, which has pushed its spot price up to $94,500. Bitcoin’s rally is fueled by renewed appetite for risk assets, including crypto and equities, amid a weakening U.S. dollar.
▣ EOG Resources (EOG) reported Q1 revenue of $5.6 billion, down 7.4% year-over-year and below the consensus estimates of $5.9 billion. Adjusted EPS slipped 2% to $2.87 but beat estimates of $2.78, while free cash flow totaled $1.3 billion. In response to potential tariff-related demand risks, EOG cut its FY25 capex outlook by $200 million to $5.8–$6.2 billion. Oil output will hold steady at Q1 levels, with full-year growth in oil production expected at 2% and 5% overall. The company also announced a shallow-water offshore oil discovery in Trinidad. The company declared a quarterly dividend of $0.975 per share payable July 31 to stockholders of record as of July 17, 2025.
▣ ExxonMobil (XOM) reported mixed Q1 results, with adjusted EPS of $1.76, down 14.5% year-over-year but slightly above the $1.74 consensus. Revenue came in at $83.13 billion, missing estimates of $86.3 billion, likely due to lower oil prices weighing on sales. The company returned $9.1 billion to shareholders in Q1 through $4.3 billion in dividends and $4.8 billion in buybacks, keeping it on pace to meet its $20 billion annual repurchase target. Exxon reaffirmed its 2025 capital spending guidance of $27–$29 billion. CEO Darren Woods emphasized that despite pressure to scale back spending and boost payouts, Exxon remains committed to long-term investments to sustain its leadership.
▣ IBM (IBM) announced an increase in its quarterly dividend to $1.68 per share, from $1.67 per share. The dividend will be payable on June 10 to stockholders of record as of May 9. IBM plans to invest $150 billion in the U.S. over the next five years. The investment includes over $30 billion for research and development of mainframes and quantum computers. Despite the apparent broad shift to cloud computing, some business and public data is expected to continue to be hosted via on-premises mainframes, meaning continued demand for IBM’s mainframes. The company, one of the largest employers in the U.S., said that the goal of its capex package is to fuel the economy and to “accelerate its role as the global leader in computing.”
▣ Qualcomm (QCOM) reported adjusted earnings of $2.85 per share on adjusted revenue of $10.83 billion, topping analysts’ expectations of $2.82 and $10.64 billion, respectively. Its QCT segment, which designs and provides chips such as modems and processors for smartphones, was the key driver, with sales rising 18% year-over-year to $9.47 billion. Within QCT, handset revenue grew 12% to $6.92 billion. For Q3 2025, management guided for revenue of $10.3 billion at the midpoint, slightly below the $10.35 billion consensus, and EPS of $2.70, narrowly ahead of the $2.69 estimate.
▣ VICI Properties (VICI) The company delivered mixed Q1 results, with revenue rising 3.4% year-over-year to $984.2 million, beating estimates of $977 million. Adjusted FFO per share grew 4.3% to $0.58 but missed the $0.68 consensus as higher expenses weighed on the AFFO. While FY25 AFFO guidance was raised slightly to $2.35 per share at the midpoint (up from $2.34), it remains below the $2.73 consensus estimate.
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Recent Trades
None at the moment, although we are considering adding a stock to our portfolio when the market conditions allow for an attractive entry point. Stay tuned.
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Portfolio Attributes
| Dividend Portfolio Yield |
Expected Dividend Growth | Expected Annual Income |
| 4.01% | +8.27% | $5,926.57 |
| Yield-on-Cost Adjusted, Weighted |
Average Analyst 12-Month Growth Outlook | 10K Per Stock at the Time of Purchase |
Current Portfolio
| Name | EX-Dividend Date | Payment Date | Yield on Cost | Annual DPS |
| Automatic Data Processing (ADP) | Jun 12, 2025 | Jul 01, 2025 | 2.46% | $6.16 |
| Allianz SE ADR (ALIZY) | May 09, 2025 | May 28, 2025 | 6.09% | $1.52 |
| Amgen (AMGN) | May 16, 2025 | Jun 09, 2025 | 3.27% | $9.52 |
| BlackRock (BLK) | Jun 09, 2025 | Jun 26, 2025 | 2.61% | $20.84 |
| Bank of Nova Scotia (BNS) | Jul 03, 2025 | Jul 29, 2025 | 5.98% | $2.97 |
| EOG Resources (EOG) | Jul 17, 2025 | Jul 31, 2025 | 3.05% | $3.90 |
| IBM (IBM) | Aug 11, 2025 | Sep 10, 2025 | 3.14% | $6.72 |
| JPMorgan Chase (JPM) | Jul 08, 2025 | Jul 31, 2025 | 3.2% | $5.60 |
| Kroger (KR) | May 15, 2025 | Jun 02, 2025 | 2.82% | $1.28 |
| LyondellBasell (LYB) | Jun 03, 2025 | Jun 10, 2025 | 5.62% | $5.36 |
| PepsiCo (PEP) | Jun 09, 2025 | Jun 26, 2025 | 3.64% | $5.44 |
| Philip Morris (PM) | Jun 23, 2025 | Jul 17, 2025 | 6.06% | $5.40 |
| Qualcomm (QCOM) | May 29, 2025 | Jun 26, 2025 | 2.36% | $3.56 |
| VICI Properties (VICI) | Jun 18, 2025 | Jul 03, 2025 | 5.22% | $1.73 |
| ExxonMobil (XOM) | May 15, 2025 | Jun 10, 2025 | 3.64% | $3.96 |
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Click here for more stock market analysis from TipRanks Macro & Markets research analyst Yulia Vaiman
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Disclaimer
The information contained in this article represents the views and opinions of the writer only, and not the views or opinions of TipRanks or its affiliates and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy, or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment, and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices, or performance.
