Millennials, who are 25 to 40 years old this year, overtook baby boomers as the largest generation in 2019. They're a core market for most companies, and companies that keep pace with their evolving tastes and preferences often generate stronger growth than those that do not.

Millennials are also changing investing trends in the stock market. Many investors on Robinhood, the free stock trading platform with over 13 million users, belong to that generation. Millennials also drove the recent Reddit-fueled short squeeze that catapulted battered stocks like GameStop to historic highs.

That's why analysts often keep a close eye on the most popular stocks among Robinhood users to gauge millennials' investing habits. But Verizon (VZ -0.53%), a dusty old dividend stock often favored by baby boomers, still isn't on that list -- even as its rival AT&T (T 0.17%) starts to gain traction. Let's see why millennial investors seem to hate Verizon's stock.

A young woman in sunglasses gives a thumbs down sign.

Image source: Getty Images.

Younger investors favor growth over stable returns

Wall Street expects Verizon's revenue and earnings to both rise by about 4% this year as consumers upgrade to 5G devices and its smaller advertising business stabilizes in a post-pandemic world. Those growth rates are stable for a stock that trades at just 11 times forward earnings, and it pays a forward dividend yield of 4.5%.

However, younger investors generally favor higher-growth stocks that can outperform the market and generate multi-bagger returns over the long term. Verizon, which has underperformed the S&P 500 over the past 10 years, simply doesn't check those boxes. Its total return, which factors in reinvested dividends, also falls short of beating the market.

VZ Chart

Source: YCharts

Those returns might be acceptable for retired baby boomers, who favor stability and income over growth, but it doesn't make much sense for millennials, who can still afford to take riskier bets, to stick with such conservative investments.

It's less interesting than AT&T or T-Mobile

AT&T is also considered a classic boomer stock, but it's gaining momentum among Robinhood users because its WarnerMedia segment -- which houses HBO, Warner Bros., and the Turner Cable Networks -- makes it a diversified media play across the TV, film, and streaming video markets.

The WarnerMedia business was a weak link for AT&T during the pandemic as the company postponed its new movie releases, but its aggressive streaming strategies -- which include simultaneous HBO Max releases for all its upcoming movies in 2021 -- indicate it's dead set on catching up to Netflix and Disney in the crowded streaming market. The segment's growth should also accelerate significantly after the pandemic ends.

An illustration of a 5G chip.

Image source: Getty Images.

Meanwhile, T-Mobile (TMUS 0.79%) merged with Sprint last year and surpassed AT&T as the country's second-largest wireless carrier after Verizon. Its 5G network, which is mainly supported by low-band spectrums with wider coverage areas, has almost two and half times the coverage of AT&T's 5G network and nearly four times the coverage of Verizon's 5G network.

T-Mobile, which isn't trying to become a diversified media giant like AT&T, promotes itself as a "pure play" on wireless networks. That streamlined approach -- which also eliminates contracts, subsidized phones, data coverage fees, and early termination charges with its "un-carrier" plans -- makes it a more appealing growth play than Verizon. 

In other words, investors who are looking for an undervalued stock with more upside potential might buy AT&T, which also pays a higher forward yield of 7%, while growth-oriented investors might stick with T-Mobile instead.

Verizon isn't trying to build up a massive media business, but it also isn't a pure-play wireless carrier. It's still burdened by AOL and Yahoo's internet assets (now known as Verizon Media) and its Fios pay-TV business, which both struggled during the pandemic.

But Verizon is still the right stock for certain portfolios

Verizon might not be winning over millennial investors on Robinhood, but that doesn't make it a bad investment. Verizon has traditionally been a solid defensive stock during market downturns, and the current rotation from growth stocks to value stocks could make it an appealing investment.

Nonetheless, millennial investors who can stomach a bit of volatility and plan to hold their stocks for a few decades should consider buying other higher-growth stocks before accumulating big positions in Verizon.