Verizon has considerable appeal for value-oriented investors

Sound fundamentals and a healthy dividend yield make this U.S. wireless leader attractive.

Michael Pe 10 July, 2015 | 5:00PM

Verizon Communications Inc. (VZ) is well positioned to capitalize on the rapidly growing U.S. consumer demand for mobile connectivity. Having earned industry-leading customer loyalty, Verizon continues to invest in its vast wireless networks to provide the speed and quality that smartphone users demand. This has translated into a formidable wireless business.

One of Verizon's smart decisions was not expanding into Canada. In 2013 there was rampant speculation that Verizon would, with the Harper government's blessing, enter the Canadian wireless market by acquiring Wind Mobile. In a pre-emptive move, the major Canadian carriers implemented data-sharing plans to help smaller competitors, which gave Canadian consumers more choice.

In the end, instead of taking on established Canadian providers  Rogers (RCI.B),  Bell (BCE) and  Telus (T), Verizon decided to increase its existing stake in the U.S. wireless industry. It did so by acquiring the remaining 45% stake that it did not already own in Verizon Wireless from British cellphone carrier Vodafone. The deal was completed in 2014 in a transaction valued at approximately US$130 billion.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
BCE Inc57.67 CAD0.98
Rogers Communications Inc Class B57.14 CAD1.29
Sprint Corp Registered Shs Series -1-  
TELUS Corp24.30 CAD1.72
T-Mobile US Inc100.41 USD0.71
Verizon Communications Inc56.40 USD1.11

About Author

Michael Pe

Michael Pe  Michael Pe is a project manager for the CPMS division of Morningstar. He holds a bachelor of computer science degree from the University of Western Ontario and holds the CFA designation. He can be reached at michael.pe@morningstar.com but cannot provide individual advice.

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