Telecom company Verizon Communications (NYSE: VZ) is an intriguing option for income-seeking investors. Like most investments, it’s not perfect: It’s saddled with $113 billion in debt, thanks in part to the capital-intensive needs to build and constantly improve communications infrastructure. Purchases of now-struggling assets from AOL and Yahoo! a few years ago didn’t help the balance sheet either.
But in today’s economy, wireless connectivity is a basic staple. Despite the ongoing pandemic, Verizon’s operating revenue fell only 3% during the first half of 2020. The company is also acquiring prepaid wireless specialist TracFone, which will bring in millions of new customers to whom Verizon can cross-sell other products and services.
Verizon stands to benefit from the growth of markets for 5G, the latest global wireless standard. The company’s Ultra Wideband network is already available in parts of dozens of cities, with many more on the way. Its new-and-improved technology promises “seamless 4K streaming” along with “ultralow lag on all your connected devices.”
Verizon’s dividend recently yielded a substantial 4.4%, and that payout seems safe, at only 56% of recent annual earnings. The company has ample room to continue making network improvements and service debt, while rewarding owners of its stock generously. Don’t expect any sizzling stock price performance from Verizon, but this slow-and-steady telecom business is still worth owning. (The Motley Fool has previously recommended Verizon Communications.)
Ask the Fool
Q. Can you recommend a good inflation calculator? – C.A., Reno, Nevada
A. Sure. Click over to Westegg.com/inflation, enter two years, and you can see how prices changed between them – for example, something that cost $100 in 1999 would have cost $156 in 2019. To learn the average inflation rate over a period, visit MeasuringWorth.com/inflation. (Between 1999 and 2019, for example, it averaged 2.16% annually in the U.S.) That site also shows inflation rates for specific years. Inflation was close to 0% in 2015, but topped 13% in 1980! Since the beginning of the 20th century, inflation has averaged roughly 3% annually.
Q. Can I give certificates for single shares of stock as holiday gifts? – G.R., Mount Pleasant, South Carolina
A. You can, but you may not want to. Giving a young person a stock certificate can be a fun way to introduce them to investing, but in this digital era, many companies have phased out paper certificates. You can still ask the company or your broker for a paper certificate, but it will cost you.
Some websites will offer to sell you certificates for single shares of stock, but they may charge you twice as much as the share actually costs , and there’s a good chance you’ll just be getting a replica of a certificate. (You’ll also get paperwork confirming you do own that share.)
Alternatively, you might just transfer one or more shares of a stock you own from your brokerage account to an account belonging to the recipient. If your recipients are minors, they’ll need custodial accounts, likely with a parent or guardian as custodian. Ideally, focus on companies they admire, like Disney, Nike or Starbucks.
My dumbest investment
My dumbest investment was moving conservative investments into my company’s stock, based on the recommendations of investing pundits. The stock tanked shortly after that. – J.G., online
The Fool responds: It’s easy to assume that investing pundits you see on TV, online or in print are highly stock-savvy and bursting with profitable investment ideas for you. The truth is they vary widely in investing skills, insights and performance; it can be hard to know how worthy of your attention they are.
It also might have seemed smart to park much of your money in the stock of your employer, since you’re more familiar with that company. Remember, though, you’re already depending on your employer for your current financial needs. If, on top of that, you invest much of your long-term savings in your company, you’re keeping a lot of your eggs in a single basket. Should the company fall on hard times, you might lose your job – along with much of your retirement savings. Plenty of seemingly solid companies have seen their fortunes change for the worse.
Aim to spread your long-term dollars across a range of investments in which you have confidence.
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