Sarah Travers
After facing substantial losses in 2022, the stock market has made a remarkable recovery over the past 20 months. Since the beginning of 2023, major indices like the S&P 500 and Nasdaq Composite have surged, boasting returns of 48% and 66%, respectively. While these gains are impressive, experienced investors recognize that the market’s upward trajectory can shift at any moment. With September historically being a volatile month for the stock market, it may be time to shift from high-growth stocks to more reliable dividend-paying options as uncertainty looms.
Why September Could Be Tricky
Historically, September is one of the most unpredictable months for the stock market. This volatility often stems from factors like tax planning and adjustments in monetary policy by the Federal Reserve. Adding to this year’s uncertainty is the upcoming U.S. presidential election, which could introduce heightened market unpredictability. In times like these, reassessing investment strategies to focus on stability and income generation could be a wise move.
Dividend-paying stocks are particularly attractive during periods of market turmoil. They provide steady returns, which can help offset potential market losses. One standout in this category is Verizon, a leader in the telecommunications industry with a proven track record of delivering high dividend yields. Given the historical performance of both the market and Verizon in September, now may be the perfect time to consider adding this stock to your portfolio.
Verizon’s Impressive Dividend History
While the telecommunications industry may not offer the same excitement as rapidly growing tech sectors, Verizon remains a beacon of stability. For income-focused investors, Verizon’s dividend history is particularly appealing. The company has increased its dividend payouts for 17 consecutive years, providing shareholders with a reliable income stream.
September has traditionally been the month when Verizon announces its dividend increases, which could make this month an opportune time to invest. Though past performance is no guarantee of future results, Verizon’s commitment to rewarding shareholders through consistent dividend growth is a positive sign for potential investors.
Verizon’s Financial Stability
Though Verizon’s revenue growth has been somewhat erratic in recent years, the company continues to generate substantial cash flow. For example, in the first half of 2024, Verizon reported $65.8 billion in revenue—a modest 0.5% increase compared to the previous year. However, more notably, Verizon’s free cash flow grew by 6.9% during the same period, reaching $8.5 billion.
This robust cash flow enables Verizon to maintain and grow its dividend even during times of slower revenue growth. Despite some challenges on the top line, Verizon’s financial foundation is solid, making it a dependable option for dividend-seeking investors.
Why Verizon Shines Among Dividend Stocks
At the moment, Verizon’s stock offers an exceptionally high dividend yield of 6.2%, which is well above the market average. By comparison, the SPDR S&P 500 ETF Trust offers a yield of just 1.2%. Moreover, Verizon’s forward price-to-earnings (P/E) ratio is 9.4, significantly lower than the S&P 500’s forward P/E of 22.4, indicating that the stock may be undervalued relative to the broader market.
Given these metrics, Verizon’s stock presents a compelling opportunity for investors who prioritize income and stability. With market volatility expected in September, stocks like Verizon that offer strong returns with lower risk may be particularly appealing to cautious investors.
Why Verizon Is a Timely Buy in Uncertain Markets
As investors navigate the uncertainties of the market this September, Verizon’s high dividend yield and strong financials make it an attractive option. With its history of consistent dividend growth and a solid financial foundation, Verizon offers a stable source of income during volatile times.
Investors seeking to reduce their exposure to higher-risk growth stocks while adding reliable, income-generating assets to their portfolio may find that Verizon checks all the boxes. Between its high dividend yield, history of September dividend hikes, and steady cash flow, Verizon stands out as a solid investment choice as we head into a potentially turbulent market period.
