VZ Stock Hits Near-Yearly High: Is This the Telecom Turnaround Investors Waited For?

People stop caring about a certain type of stock around the time it ceases to surprise them. For many years, Verizon has been that stock—a utility-like brand kept in retirement accounts, known primarily for its dividend and infrequently for its growth. That’s beginning to change, and it’s important to consider why.

Verizon Communications’ stock ended Friday at $50.10, up 1.36 percent and slightly below its 52-week high of $51.68. The stock was trading closer to $38 back in the spring. That isn’t a spectacular Silicon Valley-style rally, but for a company this size—a $208 billion telecom behemoth with 97,600 workers and a network that serves almost 147 million wireless subscribers—such a rise doesn’t happen by coincidence.

Verizon’s second-quarter results, which were released in late July, appear to be the catalyst. Earnings per share of $1.30 exceeded expectations of $1.27, but revenue came in at $34.25 billion, slightly lower than a year ago and below what analysts had predicted. The return on equity was close to 19.5%, which is a good figure for a business in a developed, crowded wireless market where expansion is difficult to achieve. Analysts appear to interpret management’s reaffirmed full-year guidance of $4.99 to $5.04 per share as conservative rather than cautious.

However, the more fascinating story is revealed in the segment details. Verizon’s consumer division saw a 22% decline in phone and equipment sales, indicating that consumers are spending more wisely, holding onto their devices longer, and upgrading less.

However, revenue from home and wireless internet services increased by 3.3 percent to $19.6 billion, which is the most significant portion of the balance sheet. Selling phones isn’t really how Verizon makes money. Regardless of whether they purchase anything new or not, it generates revenue by keeping users connected to a network on a monthly basis. Perhaps the quiet engine driving the stock’s movement is the shift toward pure connectivity revenue, with the consumer segment reporting a 45 percent profit margin.

Additionally, the dividend, which is currently yielding about 5.6% at $2.83 annualized, is high even by telecom standards and significantly higher than Verizon’s own five-year average. With a payout ratio of almost 74%, there is some leeway but not much. In a market where bond returns have been erratic, investors seeking yield appear to be returning to Verizon almost automatically.

There are those who doubt the viability of this rally. With nine buy ratings, twelve holds, and a consensus price target of $50.84—basically where the stock currently trades—analyst sentiment is still strangely divided for a stock that is close to its highs. That’s essentially Wall Street shrugging. Even as the price rises, some institutional investors have been reducing their holdings; Manufacturers Life reduced its ownership by 5%, and Caisse de Ré Gén et placement du Québec sold off almost half of its holdings. Although it was part of a prearranged trading plan, CEO Kyle Malady also sold shares, which usually means less than the headlines suggest.

The paradox at the heart of this tale—a company being sold by some of its biggest investors while its stock steadily rises toward an annual high—is difficult to ignore. After a successful run, that might just be profit-taking. Perhaps it represents sincere skepticism about how far a low-growth telecom can go. Verizon is not reimagining itself. It’s not creating anything ostentatious or chasing AI headlines. For the time being, it’s sufficient to simply collect consistent payments from tens of millions of people who depend on their phones for work.