As the largest wireless company in the U.S., Verizon Communications (VZ 0.43%) needs no introduction to investors. As the dominant offspring of AT&T's (T 1.33%) 20th-century "Ma Bell" telephone monopoly, the massive scale of both Verizon and AT&T remains one of their key competitive advantages over smaller rivals T-Mobile and Sprint. A longtime dividend stock, Verizon has appreciated nearly 450% since the mid-1980s, even before factoring in the returns from its regular payouts.

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Verizon share price history

Verizon's modern corporate history begins at the end of an era -- the breakup of the former AT&T Bell System. To resolve a decade-long antitrust case with the Department of Justice, AT&T agreed to break up the Bell Operating System into seven Regional Bell Operating Companies, or RBOCs, which quickly received the much friendlier nickname "Baby Bells." That divestiture reduced AT&T's book value by roughly 70%, and opened the door for renewed competition in the U.S. telecom industry. The stage was set for Verizon's rise.

Today's Verizon Communications grew out Bell Atlantic, the Baby Bells that served the mid-Atlantic states. In 1997, Bell Atlantic orchestrated what was at the time the second-largest merger in U.S. history, combining with NYNEX, the Baby Bell that served the Northeast region. At that point, the combined company provided telecommunications services to 36 million customers along the Eastern Seaboard.

Then in 2000, Bell Atlantic merged with GTE and renamed itself Verizon Wireless. The resultant $90 billion entity was 55% owned by Bell Atlantic and 45% owned by British telecom giant Vodafone, which controlled GTE at the time of the merger. Bell Atlantic, NYNEX, and GTE each restructured their equity shares to create the common stock that today trades as VZ on the New York Stock Exchange.

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Verizon has engaged in three stock splits over the course of its trading life, dating back to December 1983 when it still traded as Bell Atlantic. In total, Verizon stock has increased in value on a split-adjusted basis from about $8 per share in 1983 to about $48.50 today, which translates into a roughly 6% annual share price gain. However, this overlooks the effect of its dividends, an important piece of the investment thesis for traditionally high-yielding telecom stocks.

Though it isn't a dividend aristocrat like AT&T, Verizon has returned an impressive sum via payouts to its shareholders. In fact, it has paid $49.90 per share in cumulative dividends on a split-adjusted basis since 1984 -- effectively doubling the total return generated by Verizon stock. Crucially though, investors who reinvested their quarterly dividends as they were paid saw their investments compound at even greater rates of return.

Where Verizon goes from here

Looking to the future, Verizon's investment outlook remains quite favorable amid a changing telecom and media landscape. It stands as the largest telecom player in the U.S., though AT&T is roughly an equal in terms of scale. Despite the valiant efforts of T-Mobile and Sprint to pry mobile subscribers away from them, AT&T and Verizon each still enjoy roughly twice as many subscribers as the No 3 and No 4 players. The added financial flexibility their scale offers constitutes a huge advantage in terms of investing in future growth, as their recent moves clearly demonstrate.

In the past two years, Verizon has spent over $9 billion to purchase AOL  and Yahoo! to diversify its revenue stream. With the U.S. wireless market reaching saturation, Verizon hopes the massive scale of AOL's and Yahoo's mobile content businesses will drive additional advertising revenue and buoy its top-line growth. According to eMarketer, global spending on mobile advertising is expected to rise from $68 billion in 2015 to $195 billion by 2019. To what extent Verizon will be able to compete with online ad giants like Facebook and Alphabet remains to be seen, but it's intentionally skating where the proverbial puck is headed at this point. The company also enjoys enough financial flexibility that it can also invest in a 5G network that should begin coming into use toward the end of the decade, which should help its mobile offerings remain highly competitive into the foreseeable future.

When a company produces over $131 billion in annual sales, it takes a lot to make a material impact its financial performance. However, Verizon's dominant position in its core market, and its wise moves into future growth markets still make it an appealing telecom investment, particularly for investors seeking a steady stream of dividend payments.