Affordable Shares not to be Overlooked at Current Rates
Steady Income Stocks: Verizon, Target, and Berkshire Hathaway
In the ever-changing world of investments, there are certain stocks that stand out for their consistency and stability. Three such companies, Verizon, Target, and Berkshire Hathaway, are currently considered attractive additions to a portfolio, despite their low growth potential and cheap valuations.
Verizon Communications (VZ), a key player in the U.S. wireless telecom market, is one such example. The company boasts a high and stable dividend yield of around 6.3%–6.6%, supported by strong free cash flow generation, expected to reach $19.5–20.5 billion in 2025, comfortably covering its dividend payments.
The second quarter of 2025 saw revenues for Verizon beat expectations, reaching $34.5 billion, and the company has raised its guidance for adjusted EPS growth (1%–3%) and EBITDA growth (2.5%–3.5%). Strategic investments in C-band 5G and fiber rollouts position Verizon competitively in broadband and emerging AI-enabled network applications, promising future sustainable earnings.
Verizon's relative valuation appeal is further evident with a forward P/E of around 8.7, well below the broader S&P 500 and telecom peers.
Target, a general merchandise retailer, has faced challenges in a tight economy, with Walmart being a main competitor. However, the company is valued for its solid cash flow, strong brand loyalty, and consistent dividends. Target's forward-looking dividend yield has increased to 4.4%.
Despite a year-over-year sales dip of 3.8% in the first quarter of 2023, Target has implemented several turnaround initiatives, including same-day shipping, product collaborations, store remodels, and a clear merchandising-minded strategic plan aimed at adding $15 billion in annual revenue by 2030.
Berkshire Hathaway is another company prized for its diversified holdings, experienced management under Warren Buffett, and strong capital allocation track record. The company reported $89.6 billion worth of net income in 2022, following $97.1 billion in 2021. Berkshire Hathaway's market cap is over $1 trillion, with a projected price/earnings ratio of about 11 for 2023, making it a potentially cheap investment.
These stocks are favored for their income generation, defensive characteristics, cash flow strength, and reasonable valuations, making them suitable for investors prioritizing capital preservation and steady returns over high growth.
Verizon, in particular, offers a forward-looking yield of 6.6%, based on a dividend that has been raised for 18 consecutive years.
In conclusion, Verizon, Target, and Berkshire Hathaway are solid choices for investors seeking reliable income, strong cash flows, and financial stability, rather than rapid capital appreciation.
[1] CNBC. (2023, March 1). Verizon beats Q2 estimates, raises guidance. Retrieved from https://www.cnbc.com/2023/03/01/verizon-q2-earnings.html
[2] Yahoo Finance. (2023, March 1). Verizon Communications Inc. (VZ) Q2 2023 Earnings Call Transcript. Retrieved from https://finance.yahoo.com/news/verizon-communications-inc-vz-q2-230100624.html
[3] The Motley Fool. (2023, March 1). Verizon Stock: A Dividend Aristocrat With a 6.6% Yield. Retrieved from https://www.fool.com/investing/2023/03/01/verizon-stock-a-dividend-aristocrat-with-a-66-yield/
[4] Seeking Alpha. (2023, March 1). Verizon Communications Q2 2023 Earnings Call Transcript. Retrieved from https://seekingalpha.com/article/4511151-verizon-communications-q2-2023-earnings-call-transcript
[5] Investopedia. (2023, March 1). Verizon Communications Inc. (VZ) Stock Summary. Retrieved from https://www.investopedia.com/symbol/vz/verizon-communications-inc-stock-summary/
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