Many income investors love Verizon Communications (VZ -0.73%) stock. It's easy to see why. After all, the telecom giant pays a juicy forward dividend yield of 6.4% at the current stock price. Verizon has also increased its dividend for 18 consecutive years.
The company provided its 2025 second-quarter update on July 21. And income investors now have even more to love about this ultra-high-yield dividend stock.
Image source: Verizon Communications.
2 billion more reasons to buy Verizon
It might sound a little gimmicky to say that there are now 2 billion more reasons for income investors to buy Verizon stock. However, it's the truth.
Verizon increased its full-year free cash flow guidance to between $19.5 billion and $20.5 billion from its previous outlook of $17.5 billion to $18.5 billion. This extra $2 billion at the ends makes the company's dividend more secure. It also puts Verizon in an even stronger position to extend its impressive streak of dividend hikes. If that doesn't make this stock more attractive to income investors, I don't know what will.
Additionally, Verizon raised the lower end of its full-year adjusted earnings per share (EPS) growth guidance range by 1%. The company increased the lower end of its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) growth outlook range by 0.5%.
What's behind Verizon's greater optimism about the rest of the year? It in part reflects the solid results the company delivered in Q2. Verizon topped Wall Street's revenue and earnings estimates. However, the company also expects to benefit from tax reform.
More to like than just the dividend
Verizon will appeal primarily to income investors because of its fantastic dividend. However, there's more to like about this stock than just the dividend.
Value investors could find Verizon's forward price-to-earnings ratio of 8.7 intriguing. Not only is this only a fraction of the S&P 500's forward earnings multiple of 22.7, but it's also well below the valuations of other telecom leaders such as AT&T (T -0.07%) and T-Mobile US (TMUS -0.54%).
I doubt that growth investors will be interested in Verizon. That doesn't mean the company won't be able to grow, though. Verizon CEO Hans Vestberg noted in the Q2 earnings call that the sales funnel for AI Connect "has nearly doubled to $2 billion" since the AI-enabled network, cloud, and private fiber connectivity solutions portfolio launched earlier in 2025. I think this will continue to be a strong growth driver for Verizon as AI applications move to the edge of networks.
Verizon's pending acquisition of Frontier Communications (FYBR -0.07%) should boost growth, too. CFO Tony Skiadis said that Verizon "remain[s] on track for an early 2026 close" on this deal. He noted that eight states, the Federal Communications Commission, and the U.S. Department of Justice have already given their approvals to the transaction. Verizon is working with the remaining state regulatory agencies needed to finalize the acquisition.
Bet on the jockey
The additional $2 billion in free cash flow Verizon expects to generate this year wouldn't be possible if the company didn't have an exceptional management team. Income investors should take comfort in the fact that Vestberg and other executives are focused on what matters most.
During the Q2 earnings call, I counted 18 times that management used the word "discipline" to describe their approach. At one point, Skiadis said, "we're not chasing growth for the sake of growth." Vestberg mentioned that management wants to put the board of directors in a position to continue growing the dividend.
Those are the kinds of things income investors should love to hear. And while Verizon just gave 2 billion more reasons to buy the stock, perhaps the best long-term reason to do so is the old adage, "Bet on the jockey."
