Editor's note: The number of shares needed to get $500 in annual dividend income has been corrected in this article.
Verizon Communications (VZ 1.03%) has a large base of customers and a long record of paying dividends. It's got a streak of increasing the dividend each year for 17 consecutive years and that has raised investor interest, although shares trade well off all-time highs.
If you are looking for some annual income to help pay the bills, Verizon stock has the potential to help. Here's how many shares of Verizon stock you would have to buy to earn $500 per year in dividend income.
What is Verizon's dividend yield?
In 2023, Verizon increased the quarterly dividend by 2% to $0.665 per share, bringing the per-share distribution for the full year to $2.66. With the share price sitting at $40.71, the stock's dividend yield is currently 6.6%.
To generate $500 of passive income from the stock annually, an investor would have to buy 188 shares costing roughly $7,800.
What's great about Verizon as a dividend investment is the nature of its wireless service business, which is built around consistent monthly revenue from charging customers for their wireless service plans. The company had 94 million postpaid connections in 2023, which refers to the billed wireless plan that most people use. This monthly revenue lends itself to consistent financial results and quarterly dividend payments to shareholders.
Is the stock a buy?
The stock is trading about 37% off its highs. The lowered share price stems from concerns over increasing competition. However, Verizon reported improved churn rates with postpaid customers in the first quarter, potentially easing some of those concerns. The stock is up 8% year to date, slightly behind the Nasdaq Composite's return.
It's also encouraging that management expects free cash flow to improve throughout the year, which should lead to another dividend increase this year.
