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A $10,000 investment in Verizon in 2015 is worth just $14,650 today, significantly lagging the S&P 500.
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The same investment in 2005 grew to $27,400 in 2015, beating the market.
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The stock may be suitable for dividend-focused income investors, but investors looking for long-term growth should look elsewhere.
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10 stocks we like better than Verizon Communications ›
Bear with me for a moment; I want to start this overview with a quick history lesson.
Verizon Communications (NYSE: VZ) In 2015, tamales were all the rage. The telecommunications giant was once a hot commodity in the early days of the smartphone era. If you invested $10,000 in Verizon stock in late 2005, initiated a dividend reinvestment plan (DRIP), and ignored it for the next 10 years, you would have a market-beating $27,400 in your pocket.
But the smartphone boom has slowed over the years apple (NASDAQ:AAPL) Successfully built one of the world’s largest market capitalizations around the iPhone.
Verizon’s surging sales growth slowed. smaller competitors T-Mobile United States (NASDAQ: TMUS) Stealing millions of Verizon mobile subscribers. Despite several rounds of expensive network infrastructure upgrades, the company continues to generate significant cash flow.
But the old magic is gone. If you started with a new investment of $10,000 in Verizon on December 22, 2015, you would have a total return of $4,650 today, for a total value of $14,650. That’s better than keeping cash under your pillow for ten years, but it’s also far behind S&P 500 Index (SNPINDEX:^GSPC) The total return value during the same time period was $40,220.
Verizon remains a solid dividend stock, driven by generous cash flow. The current dividend yield is 6.9%, one of the 10 highest dividend yields in the S&P 500.
So the stock might make sense for dividend-hungry income investors, but it doesn’t appear to be able to sustain its value over the long term. Maybe decades from now, as retirement approaches, I’ll change my attitude, but I wouldn’t buy Verizon stock today. At this rate, I’m not even sure Verizon will be the leading telecom competitor in 20 years (or even 10 years).
Before buying Verizon Communications stock, consider the following factors:
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consider when Netflix This list was created on December 17, 2004… If you invested $1,000 when we recommended, You will have $504,239!* or when NVIDIA This list was created on April 15, 2005… If you invested $1,000 when we recommended, You will have $1,159,896!*
