Why Big Money Investors Love Verizon Communications Inc.

Three well-known investors bought Verizon this year, and you should take notice.

May 16, 2014 at 3:30PM

U.S. stock markets were rising in late afternoon after a slow start to Friday's trading. The Dow Jones Industrial Average (DJINDICES:^DJI) was up 0.21% at 3:30 p.m. EDT after bouncing near breakeven for most of the day. The one economic report that caught investors' attention was the Thomson Reuters/University of Michigan initial consumer sentiment reading, which fell to 81.8 in May from 84.1 in April. Consumers drive 70% of the economy, and the more confident they are the more the economy is likely to grow. So this reading could lead to some anxiety in the short term.

One stock that is charging higher today is Verizon Communications (NYSE:VZ), up more than 2%, which has become a popular stock among well-known investors.

Hedge funds bet on Verizon
In regulatory filings, it was revealed that Dan Loeb's Third Point, John Paulson's Paulson & Co, and Warren Buffett's Berkshire Hathaway all added positions in Verizon in the first quarter, highlighted by an 11-million-share purchase by Buffett.  


Verizon's Share Everything plan is bringing in customers and keeping them with Verizon.

There are three big reasons Verizon is a favorite of investors, led by its massive competitive moat in the U.S. wireless market. The company has the biggest and best network, something that took billions of dollars to build and would be incredibly expensive to replicate. AT&T can compete on infrastructure, which essentially creates a duopoly in wireless, but T-Mobile and Sprint have to compete on price, leaving Verizon with the customers willing to pay for high-margin data plans.

A moat like that usually doesn't come with a low stock price, but it could be argued that this is one of the best values on the market. Verizon shares trade at 11 times trailing earnings and investors get a 4.4% dividend yield.

The competitive moat and value is topped by more opportunities for long-term growth. Verizon added 2 million retail customers in the last two quarters, and a higher percentage are on lucrative LTE plans with multiple connections. That makes Verizon's product very sticky and will bring in new customers as content demand grows.  

Verizon isn't a sexy name on the market, but it's a great company with a wide moat, good value, and opportunities for growth over the long term. I, for one, agree with the big names who bought Verizon in the first quarter and think this will be an outperforming stock for years to come.

Top dividend stocks for the next decade
Verizon is a top dividend stock and the smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Travis Hoium manages an account that owns shares of Verizon Communications. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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