Market crashes lead to a list of “safe haven” investments. These run from Treasury bonds to gold and low PE stocks. With some well-known companies like Amazon having stock prices down over a third, the hunt for safety has grown even more urgent. If investors could hold only one stock during the carnage, it is Verizon Communications Inc. (NYSE: VZ).
Verizon was once part of one of America’s oldest companies. AT&T was divided into seven regional companies in 1982. Verizon later emerged as a national phone company, known particularly for its wireless operations.
Despite some pressure on wireless company margins, Verizon will remain one of only three large companies that offer 4G and 5G services. The others are AT&T and T-Mobile. Verizon has about 32% of the market, compared to AT&T’s 40% and T-Mobile’s 24%. They have created, among themselves, one of the best business walled gardens in American business. Setting up another wireless network would cost tens of billions of dollars.
Verizon’s stock has dropped to $37 a share, which is near its 52-week low. Wall Street did not like its earnings momentum. However, its wireless revenue rose 10% last quarter to $18.8 billion. Verizon is also one of America’s largest companies, with annual revenue of $136 billion across all its divisions.
The engine of Verizon’s growth over the next several years is the movement of American wireless consumers from 4G to ultra-fast 5G networks. Verizon has a chance to take customers from its two rivals. At the same time, it can raise prices for faster service.
Most importantly for investors who want a safe return, Verizon’s dividend is 6.93%, one of the highest among all large American companies. Because of its balance sheet, even with a recession, this will not drop.