Storied telecom titan Verizon Communications (VZ +1.43%) had its ups and downs over the past year, and they were reflected in its stock price. Shares languished well below $40 for much of 2023, reaching a 52-week low of $30.14 last October.
But in recent months the stock has bounced back, hitting a 52-week high of $43.21 at the end of January. The share price dipped again recently, so is now the time to invest in Verizon?
Before deciding to buy, it's best to dig into where Verizon is currently at given the stock's roller-coaster year. This will help you gauge if Verizon is a worthwhile investment in 2024 and over the long term.
NYSE: VZ
Key Data Points
Verizon's ability to acquire customers
One reason Verizon stock struggled last year is the company's decline in 2023 revenue compared to 2022. For the full year, Verizon generated $134 billion in 2023 sales, a 2% decrease from the previous year.
A key factor in last year's revenue drop was three consecutive quarters of declines in postpaid phone subscriptions within Verizon's consumer division. Postpaid subscribers are the telecom industry's most valuable customers.
Consequently, Verizon's consumer segment saw 2023 sales drop 1.8% year over year to $101.6 billion. Its consumer division is essential to the company's success since it represented 76% of Verizon's 2023 revenue.
One bright spot, however, is Verizon's business segment. This division experienced several quarters of consistent postpaid phone net growth.
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And in the fourth quarter, Verizon finally managed to reverse the trend in consumer postpaid phone net losses to achieve 318,000 net additions, leading to a share price boost after Q4 earnings were released. Not only is this an impressive turnaround from the rest of the year, it's a substantial jump from the the 41,000 net adds in the fourth quarter of 2022.
With Q4's impressive increase in consumer postpaid phone net adds, Verizon's wireless service revenue reached $19.4 billion for the quarter, growing 3.2% over the prior year. The company expects wireless service revenue to continue its growth in 2024, forecasting a year-over-year increase of at least 2%.
Verizon's customer acquisition in broadband
Verizon management attributed the turnaround in consumer postpaid phone subscriptions to the success of initiatives such as its myPlan program, which allows consumers to add a la carte features like streaming services to mobile phone plans.
Another contributing factor is Verizon's growth in internet services. The company's new 5G network is powerful enough to deliver wireless broadband to homes and businesses, what Verizon calls fixed wireless.
In locations where customers sign up for fixed wireless service, Verizon experienced an increase in mobile phone subscriptions as well. So fixed wireless internet is not only key to generating broadband revenue, it helps grow customers in Verizon's all-important consumer division.
And Verizon's broadband adoption is growing rapidly. Q4 represented the fifth consecutive quarter of over 400,000 net additions to its internet service, with 375,000 of those signing up for fixed wireless. This brought total subscribers to over three million as 2023 fixed wireless net adds rose 31% over 2022.
To buy or not to buy Verizon stock
A further consideration when evaluating Verizon stock is the company's free cash flow (FCF). FCF indicates Verizon's ability to fund its high-yield dividend, currently over 6%. In 2023, FCF reached $18.7 billion, up from $14.1 billion in 2022.
Thanks to its FCF strength, Verizon increased its dividend for the 17th consecutive year last fall. That's the longest streak of dividend increases in the U.S. telecom industry, according to Verizon.
The company was able to wrap up 2023 on a strong note in part because of a change in executive leadership last March. Sowmyanarayan Sampath took over Verizon's consumer division after running the company's business segment. Since then, the gradual improvement in consumer postpaid net additions each quarter suggests these management changes benefited the company.
Combined with its rise in FCF and the continued strength expected in wireless service revenue, Verizon looks to be on the upswing entering this year. This makes Verizon stock a buy for 2024, and its high-yield dividend, combined with a long streak of increases, means you'll also collect passive income by holding on to this investment over the long term.
