The mobile business isn't the high-growth industry of times past, but Verizon (NYSE:VZ) continues to chug along as it builds out the next-generation 5G network. Net subscriber additions in the fourth quarter accelerated from a sluggish start early in 2019, the media group (made up of AOL and Yahoo! assets scooped up a few years ago) stabilized after an extended period of decline, and net debt ended down $3.72 billion and close to management's long-term target. 5G is still a work in progress, and Verizon isn't likely to reenter growth mode anytime soon, but solid performance means the 4.1%-yielding dividend is still a good pick for investors looking to generate some income.  

Promotions lead to higher retail additions

First up, on the consumer side, net wireless subscriber additions of 731,000 and a 6.3% wireless upgrade rate helped push segment revenue up 2% in Q4 to $24.2 billion. Management credited its ongoing promotional activity for the increase, specifically the Disney+ (NYSE:DIS) streaming service bundle for customers with unlimited data plans. Those gains were offset by continued weakness in the FiOS wireline business. Revenues were flat year over year, with more high-speed internet customers offsetting traditional phone and TV cord-cutting.

Four young people standing against a red wall using smart phones.

Image source: Getty Images.

It was a similar story on the business end, with 396,000 net wireless adds getting slightly offset by wireline voice net subscriber losses of 99,000. Even so, business segment revenue of $8.07 billion in the quarter notched a 1% increase. Media Group sales of $2.1 billion were flat -- not great, but better than the negative territory of early 2019. Altogether, wireless strength helped Verizon manage modest growth in the last year.  

Metric

Full-Year 2019

Full-Year 2018

Change

Revenue

$131.9 billion

$130.9 billion

1%

Adjusted earnings per share

$4.81

$4.71

2%

Capital expenditures

$17.9 billion

$16.7 billion

7%

Free cash flow

$17.8 billion

$17.7 billion

1%

Data source: Verizon.  

The business segment is old and tired, for now

Of course, much of these results are built on Verizon's 4G network, and after a decade the growth there is scant and highly susceptible to competitive forces as the company dukes it out with AT&T (NYSE:T) and T-Mobile (NASDAQ:TMUS). Things could start to pick up in 2020, though, as Verizon's 5G -- currently available in parts of 34 cities -- rolls out in more markets.  

While many consumers are excited about the prospect of near-gigabit data speeds on their phones, from an investment perspective it's Verizon's business segment that is set to benefit the most from 5G. Another $17 billion to $18 billion in expected capital expenditures in the year ahead will support, among other things, the continued development of the new network. CEO Hans Vestberg said on the earnings call that many businesses are anxious to get access to the next-gen wireless service, and demand should be a key driver of Verizon's growth.  

Early results have thus far been promising, with 5G use cases powering things like a Corning (NYSE:GLW) fiber-optic cable factory and Verizon partnering with Amazon's (NASDAQ:AMZN) cloud computing segment Amazon Web Services (AWS) to bring early 5G access to the network edge in Chicago. More coverage should equate to more deals like this for Verizon's sleepy business segment and expanding what's possible for its mobile business.  

As for 2020, management said to expect revenue growth in the low-to-middle single digits and adjusted earnings growth of 2% to 4%. It's not setting the world ablaze, but while 5G waits in the wings, Verizon's leading network is still best in class and handily supporting the 4.1%-a-year dividend payout.