As we move further into 2024, the stock market has shown remarkable resilience after facing significant declines in 2022. The S&P 500 and Nasdaq Composite have both delivered impressive total returns since January 2023, standing at 48% and 66% respectively. However, experienced investors understand the importance of being cautious during times of market exuberance and consider taking profits off the table to explore more stable investment opportunities.
September has historically been a challenging month for the stock market, characterized by heightened selling pressure. Various factors such as tax planning, Federal Reserve monetary policy changes, and the upcoming presidential election in 2024 contribute to the uncertainty that can trigger substantial market sell-offs.
In light of this, investors may want to shift their focus to more reliable opportunities, such as investing in consistent dividend-paying stocks. One standout candidate in this regard is Verizon Communications (NYSE: VZ), a telecom stock known for its solid track record of raising dividends over the years.
Verizon’s dividend history speaks volumes about the company’s commitment to rewarding shareholders. With 17 consecutive years of dividend increases, Verizon stands out as a reliable income-generating investment option. What sets Verizon apart is its tendency to announce dividend raises in September, making it an attractive choice for investors seeking passive income.
However, past performance is not a guarantee of future results. To assess the likelihood of an upcoming dividend raise, it’s crucial to delve into Verizon’s financial performance and position. While the company has experienced some fluctuations in revenue and free cash flow growth, it has consistently generated substantial cash flow and maintained its dividend payouts even during periods of slower growth.
In the first half of 2024, Verizon reported $65.8 billion in total revenue, showing a modest year-over-year increase. Despite the muted revenue growth, the company’s free cash flow rose by 6.9% to $8.5 billion, highlighting Verizon’s ability to sustain its profitability.
Currently, Verizon stock offers an enticing dividend yield of 6.2%, significantly higher than the S&P 500 ETF Trust’s dividend yield of 1.2%. With a forward price-to-earnings ratio of 9.4, Verizon’s valuation presents a discount compared to the broader market. Recent upward movements in Verizon’s share price suggest that investors anticipate further dividend increases in the future.
Considering the historical trends of September market volatility, now could be an opportune moment to capitalize on Verizon’s strong fundamentals, consistent cash flow generation, and potential dividend hikes. By diversifying your portfolio with reliable dividend-paying stocks like Verizon, you can safeguard your investments against market uncertainties and benefit from steady income streams.
As we navigate through the complexities of the current market environment, exploring opportunities like Verizon can provide stability and long-term growth potential for investors. Stay informed, stay vigilant, and seize the opportunity to make smart investment decisions in September and beyond.
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