Verizon Communications (VZ 0.90%) is having an excellent 2021. Its second-quarter revenue grew an impressive 10.9% year over year, but given the pandemic's negative impact last year, an increase is to be expected. What's notable is that Verizon also beat 2019's second quarter by 5.3%, despite the continuing effects of COVID-19.

Even so, the performance did little for the stock price, which had reached a 52-week high of $61.95 last December, but currently trades around $55 per share. Does this create a buy opportunity, or is there a reason for concern amid the strong second-quarter results?

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Signs of 5G's impact

Second-quarter results point to many positives about the company's direction. Revenue of $33.8 billion not only bested last year's $30.4 billion, it also exceeded 2019's $32.1 billion. But even more significant is the period's wireless equipment revenue. It rose 47.7% year over year as more customers upgraded devices.

The rise in wireless equipment revenue has long been brewing. The advent of 5G technology promised new revenue opportunities, among them upgrades to devices that support 5G. Verizon's recent quarterly results indicate this is happening.

Customer upgrades have resulted in about 20% of Verizon's wireless phone base now being on 5G-enabled devices. CFO Matt Ellis said he expects to see "good equipment volumes in the second half of the year" thanks to company promotions combined with new 5G-enabled devices hitting the market.

In the first half of 2021, Verizon pulled in more wireless equipment revenue than it has in the past two years.

Revenue for the Six Months Ended June 30 2021 2020 2019
Service revenue and other $56.1 billion $54.2 billion $54.5 billion
Wireless equipment revenue $10.5 billion $7.9 billion $9.7 billion

Data source: Verizon.

Other factors to consider

Its success in wireless equipment revenue adds to Verizon's consistency in delivering wireless service revenue. This segment generated $28.2 billion in second-quarter revenue, which exceeded both 2020's wireless service revenue of $26.7 billion and 2019's $27.4 billion.

Wireless service revenue was helped by growth in the company's postpaid customer segment, the telecom industry's most valuable customer type. Postpaid net adds increased to 528,000, beating last year's 352,000 as well as 2019's 451,000 postpaid net adds.

The company's strong first-half performance led Verizon to raise its 2021 guidance for growth in total wireless service revenue from a 3% minimum to between 3.5% and 4%. Despite its first-half success, the stock price moved little in the days following its second-quarter earnings release. A few factors played into this.

The quarter's wireless service revenue included income from its Verizon Media business unit. This division comprises web properties such as Yahoo!, and it added $2.1 billion to the quarter's results, a whopping 50% year-over-year increase. This outcome helped propel Verizon's service revenue and other segment to year-over-year growth, but Verizon Media is being sold.

In addition, the company's debt has risen. Verizon needed to spend $52.9 billion earlier this year to capture crucial spectrum needed to fuel its 5G network. The company's total debt stood at $151.9 billion at the end of the quarter compared to $112.8 billion last year.

The final verdict

The debt load is concerning, but Verizon is whittling away at it. At the end of the first quarter, total debt was $158.5 billion, so the company managed to chip away $6.6 billion by the end of the second.

Also, Verizon's higher guidance for wireless service revenue does not include Verizon Media contributions. It's based on the strength of the wireless business, helped by factors such as rising customer adoption of higher-priced wireless plans. In the second quarter, the company enjoyed a record high in new accounts opting into its premium unlimited plans.

And let's not forget Verizon's dividend. Its payouts are secure thanks to the company's strong free cash flow, which stood at $11.7 billion through the first six months of 2021. $5.2 billion of that cash went toward dividend payments.

Rival T-Mobile (TMUS 0.92%) offers no dividend, and AT&T's (T 1.10%) dividend is likely to decline with the impending sale of its media business. Meanwhile, Verizon has raised its dividend for 14 consecutive years, and is expected to increase it again this year.

Verizon is in a good place to see continued revenue growth with 5G adoption still in its early days. The many positives in its business outweigh its increased debt load and loss of Verizon Media income. These factors make it a worthy investment, particularly as a stable income stock.