After enduring steep declines in 2022, capital markets have shown remarkable resilience over the past 20 months. Major indices like the S&P 500 and Nasdaq Composite have seen impressive returns of 48% and 66%, respectively, since January 2023. While this upward momentum is encouraging, seasoned investors know that the good times don’t last forever. September, historically a challenging month for the stock market, may present an opportunity to pivot from high-growth stocks to more stable investments, especially in light of the market’s looming uncertainties.
September’s Market Challenges
September is known for its market turbulence, often characterized by increased selling activity. Several factors contribute to this, including tax planning and potential changes in Federal Reserve monetary policies. Additionally, the 2024 U.S. presidential election introduces another layer of unpredictability, which may drive abnormal market behavior. With these variables in play, now might be the ideal moment to reconsider portfolio allocations.
Investors looking for more stability may find solace in high-dividend-yield stocks. These stocks provide reliable returns in the form of dividends, which can act as a buffer during market sell-offs. A standout in this category is Verizon, a telecommunications giant that offers a dependable dividend yield and a solid financial foundation. Given historical trends and Verizon’s performance, September could be the perfect time to buy shares of this ultra-high-yield stock.
Verizon’s Consistent Dividend Growth
The telecommunications industry may not have the allure of high-growth sectors like technology, but Verizon remains a steady and reliable player. While it may not offer rapid growth, its strong dividend history makes it appealing for income-focused investors. For 17 consecutive years, Verizon has increased its dividend, providing a consistent stream of passive income for its shareholders.
Verizon has typically announced its dividend increases in September, making this month a potential opportunity for investors seeking higher returns. Though historical trends do not guarantee future outcomes, the timing of these increases aligns with Verizon’s commitment to rewarding its investors year after year.
Verizon’s Solid Financial Foundation
Although Verizon’s revenue growth has been inconsistent in recent years, the company has maintained robust cash flow. For example, in the first half of 2024, Verizon generated $65.8 billion in revenue, representing a modest year-over-year increase of 0.5%. Despite this lackluster top-line growth, the company’s profitability remains strong. Over the same period, Verizon’s free cash flow grew by 6.9%, reaching $8.5 billion.
This strong cash flow generation is key to Verizon’s ability to continue raising its dividend. Despite some fluctuations in revenue, the company’s cash reserves have allowed it to sustain and grow its dividend, even during challenging times.
Why Verizon’s Stock Stands Out
Currently, Verizon’s stock offers an ultra-high dividend yield of 6.2%, far exceeding the 1.2% yield of the SPDR S&P 500 ETF Trust. For income-seeking investors, this yield alone makes Verizon an attractive option. Furthermore, Verizon’s forward price-to-earnings (P/E) ratio stands at 9.4, significantly lower than the S&P 500’s forward P/E of 22.4. This valuation disparity suggests that Verizon is undervalued compared to the broader market.
As the market braces for potential sell-offs in September, stocks like Verizon that offer steady returns and lower volatility may be more appealing to cautious investors. Verizon’s historical trend of raising its dividend in September, combined with its solid cash flow and undervalued stock, positions it as an attractive investment option.
Why Verizon Is a Smart Choice During Market Uncertainty
As the markets enter a period of heightened uncertainty, September may be the ideal time to reassess investment strategies. For those seeking reliable returns amidst the volatility, Verizon’s ultra-high dividend yield and consistent dividend growth make it a compelling choice. With a proven track record of raising dividends and a financial profile that supports future growth, Verizon stands out as a stock worth considering in the coming months.
Investors looking to reduce exposure to high-growth stocks and focus on predictable opportunities might find Verizon to be an excellent addition to their portfolio as market fluctuations increase. The combination of Verizon’s attractive dividend yield, its history of September dividend hikes, and its solid financial performance makes it an investment that could provide both stability and income during uncertain times.
