Not everything is tech stocks that some dismiss as being overvalued. Rather, the Dow Jones contains some undervalued gems. Here’s one I don’t believe is on many radars.

The basics

I’m talking about Verizon Communications (NYSE:VZ). The stock’s up 15% over the past year, but I still don’t think it’s getting the attention it deserves.

Let’s rewind a little. Verizon’s one of the largest telecommunications companies in the world and provides the infrastructure that keeps people and businesses connected every day.

The company makes money in a few key ways. Postpaid wireless plans are a big area, but it has a growing broadband and internet business, along with a business and enterprise segment.

Operations are going well. The latest results from January showed 3.5m wireless retail postpaid phone additions, up 13% versus the previous year. Overall revenue grew 2%. For income investors, the 5.82% dividend yield has also acted as a powerful magnet, particularly in volatile markets where reliable income is prized.

Lacking attention

These are all positive signs, even before I get to the outlook. But I think the company has been overlooked for a few reasons. To begin with, it’s not a tech stock in the same way Apple or Amazon are. Therefore, I think some allocate cash to a small number of mega-cap tech shares to the detriment of Verizon.

Further, some feel utility companies (which Verizon can also be classified as) are boring. The mature and entrenched nature of the sector can mean some overlook the firms in the pursuit of high-growth names instead.

There’s also the case of the price-to-earnings ratio. At 10.41, it’s well below the 23.91 of the Dow Jones average. This is another sign it could be undervalued.

Why the stock could do well

Looking forward, the multi-year-high in wireless subscriber growth shows momentum is strong and should continue. We’re now in a position where high capex spend and 5G enhancements are finishing, which means more scope this year for debt reduction. The boosted cash flow could also be used for more dividends, further boosting the yield and attraacting more income hunters.

Verizon is also pushing a strategy of bundling mobile and home internet. This should act to increase customer stickiness and reduce churn, a further help for the stock.

In terms of risks, Verizon’s balance sheet is heavily leveraged, with debt levels still elevated after years of network investment. If it doesn’t bring this down as cash flow improves this year, it’s not a great look for new investors.

Even with this, I think it’s an attractive stock for UK investors to consider.

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Given the scope of juicy options this opens up, how could I go about building a portfolio with shares from across the pond?

Using the same principles

My filtering process is much the same for the US stock market as it is for the UK. It begins by examining the dividend yields of individual constituents. I’m not looking for stocks around the index average yield (1.13%), but rather companies that can offer a more generous yield.

Further, given I’m also comparing yields to UK equivalents, I want to target companies in what I believe is the sweet spot of 5%-7%. This area provides good reward while still balancing the risk out. Typically, the higher the yield, the riskier the stock is, which is why I’m sceptical when the yield’s above 10%.

Fortunately, there are plenty of household names that fit into this bracket. Some examples include HP (6.34%), Pfizer (6.45%) and UPS (5.62%).

I believe an average yield of 6% is achievable, with a diversified number of stocks from the index being held over time. Let’s say someone could invest £500 a month in the relevant S&P 500 stocks. After 16 years, the portfolio could be worth £161.8k. This means that in the following year it could pay out £809 on average each month.

It’s worth noting that dividends aren’t guaranteed. Even with a diversified portfolio, there can still be a negative drag when companies cut the income payments due to underperformance.

Making connections

One example to consider for the portfolio is Verizon Communications (NYSE:VZ). It’s one of the largest telecom companies in the US, with a current dividend yield of 5.55%. The share price is up 14% in the last year.

The company’s doing well right now under the leadership of new CEO Dan Schulman, the former chief of PayPal, who’s pushing through a multi-billion-dollar cost-saving plan for the coming years. This should boost profitability.

The latest quarterly results from last month also showed the company gained a net 616,000 postpaid phone connections in the period, indicating strong client demand. It’s this kind of demand that leads me to conclude the dividend isn’t under any threat in the near term.

It generated free cash flow of $20.1bn last year, with a high dividend cover ratio above 1, providing further signs that income payments shouldn’t be an issue. However, in terms of risks, Verizon does have strong competition in the sector. Firms such as AT&T and T-Mobile price aggressively, so they could easily take market share away if Verizon doesn’t stay alert.

Overall, I think it’s a good company to consider as part of a US income investing strategy.

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The MSCI All Country World Index — which tracks large- and mid-cap shares in developed and emerging markets — has delivered its best year since before the Covid-19 pandemic. As a consequence, dividend yields have toppled across the globe.

Yields fall when share prices rise, meaning share pickers receive lower income on their investment. But this doesn’t make it impossible to find quality high-yield shares. Indeed, stock markets remain packed with brilliant bargains, and not just in terms of future dividends.

Realty Income, Aberdeen Asian Income Fund and Verizon Communications (NYSE:VZ.) are just three top stocks deserving consideration right now. Want to know what I think makes them so great?

Realty check

Realty Income’s a US-listed real estate investment trust (REIT). As such, it offers dividend visibility that few other shares can. Under sector rules, these trusts must pay at least 90% of annual rental earnings out to shareholders.

This doesn’t necessarily mean companies like this are watertight income stocks. Dividends remain linked to profits, which can dive when occupancy levels drop and/or rent collection issues spring up.

But Realty Income’s huge portfolio of 15,000-plus properties helps spread this risk. Its diversified approach has delivered regular annual dividend growth since the mid-1990s.

Today, the REIT’s forward dividend yield’s a huge 5.9%. And its forward price-to-earnings growth (PEG) ratio’s 0.9, illustrating excellent value.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Looking to Asia

The Aberdeen Asian Income Fund is a cheap and easy way to harness the dividend potential of emerging market shares. An investment here provides one with instant exposure to 57 different dividend-paying stocks.

Okay, Asian shares can be more volatile than those in the UK and US. But it can also lead to enormous long-term returns as rapid economic growth drives company profits.

Aberdeen Asian Income’s proved an excellent dividend share down the years. Annual payouts have risen for 22 years on the spin. For 2026, its dividend yield is a tasty 7.1%. Right now, the trust also trades at a 7% discount to its net asset value (NAV) per share.

A top US stock

Verizon is in many ways one of the best US dividend shares. It’s not perfect, as high infrastructure spending and competitive pressures can impact earnings and by shareholder payouts. But there’s also a lot to like here.

Telecoms remains one of the most defensive industries out there, and especially in our increasingly digital age. This gives the company recurring subscription revenues and stable cash flows it can use to fund large and reliable dividends.

Verizon’s also raised annual dividends every year for almost two decades. Predictions of a further rise in 2026 means its shares yield an enormous 6.9%.

With the company undergoing significant restructuring under new CEO Dan Schulman, it could deliver increasingly tantalising dividends and strong capital gains looking ahead. Today, its shares trade on a low forward price-to-earnings (P/E) ratio of 8.4 times.

The post 3 dirt-cheap global dividend stocks for 2026! appeared first on The Motley Fool UK.

More specifically, I’m hunting for undervalued shares that could have room to rise. History shows that December is the second-best month on global stock markets after the current month. So here are three top UK and US stocks on my radar.

Serve Robotics

Serve Robotics (NASDAQ:SERV) stock has fallen sharply in recent days. A mixed set of third-quarter results on Wednesday (12 November) saw the company beat earnings estimates but miss sales guidance, spooking investors.

The company manufactures four-wheeled robots that make food deliveries. It describes itself as “a national leader in sidewalk robotics“, and has significant room for growth, as retailers and restaurants turn to automation to slash costs.

Serve’s delivery volumes rose 300% in Q3 from last year. To drive tenfold sales growth in 2026, it plans to have 2,000 robots on the streets by the end of this year, supported by long-term deals with Uber Eats and DoorDash.

Shares could remain volatile if weak consumer spending further impacts revenue. But on balance, I believe Serve could spring back sharply.

Fresnillo

Closer to home, I think Fresnillo (LSE:FRES) is an attractive stock to consider for a Stocks and Shares ISA. It’s up 268% in 2025, but falling precious metals prices have pulled it sharply lower in recent weeks.

And so the FTSE 100 gold stock now trades on a forward price-to-earnings-to-growth (PEG) ratio of 0.1 for this year, and 0.7 for 2026. Any reading below 1 indicates that a share is undervalued.

I think the Mexican miner could bounce back in December, reflecting a bright outlook for gold and silver prices. HSBC thinks gold (which is edging back to October’s record of $4,381 per ounce) could hit $5,000 by early 2026.

Operational problems are a constant threat to miners like Fresnillo. But I think it’s worth a close look on balance.

Verizon Communications

Despite Verizon‘s (NYSE:VZ) solid price gains in 2025, the telecoms titan still offers a stunning dividend yield. At 6.9%, its forward yield beats those of almost all FTSE 100 companies, those traditional targets for passive income investors.

That’s not all, as the US share also looks cheap based on projected profits. Its price-to-earnings (P/E) ratio is 8.9 for 2025, while its PEG multiple sits at 0.8.

I think Verizon’s a top dividend share to consider for these uncertain times. Earnings are highly sensitive to rising costs, reflecting the enormous capital expenditure budgets of utilities companies. Still, the defensive nature of the telecoms industry should translate to robust revenues and cash flows even if the economy struggles.

Verizon has hiked its annual dividend every year for almost 20 years.

The post 3 US and UK shares to consider in an ISA for a Santa Rally appeared first on The Motley Fool UK.

To find potential bargains, I screened the index for companies with a forward price-to-earnings (P/E) ratio below 10. That gave me a decent shortlist but not every stock with a low valuation is worth holding. Forecast earnings can be overly optimistic and the market may have good reason to price a company cheaply.

To narrow things down further, I ranked the list by relative trading volume and then reviewed recent earnings growth. One name in particular stood out — Verizon Communications (NYSE: VZ.). Not only does it look highly undervalued but its 6.2% dividend yield caught my attention. Then I spotted another stalwart, Pfizer (NYSE: PFE), with an even higher yield of 6.9%.

Both stocks have fallen around 28% over the past five years. In Pfizer’s case, most of those losses have been concentrated in the past 12 months. That level of decline usually signals problems but it can also be an opportunity for investors who like to consider contrarian picks.

Verizon

Verizon has been under pressure from intense competition in the US telecoms market and high infrastructure costs. Yet its financials still look solid. Earnings grew by 61.4% year on year, while revenue rose 14.7%. On a forward P/E ratio of 9.4, that looks cheap compared with many other S&P 500 constituents.

At $44 a share, it’s a fair way down from its five-year high of $64.

What impresses me most is Verizon’s commitment to shareholders. The company has increased its dividend for 18 consecutive years, and the current payout ratio sits at 63%. That gives me confidence the dividend is sustainable even if profits slow.

Of course, there are risks. Heavy debt from network investments leaves Verizon exposed if interest rates stay higher for longer. Growth opportunities are also limited in a saturated telecoms market. 

Still, I think it’s a share for income investors to think about.

Pfizer

Pfizer’s been hit hard by declining Covid-related revenues. Much of its pandemic windfall has now disappeared, and the market has been quick to punish the stock. But away from vaccines, the company still posted revenue growth of 14.7% year on year, with earnings up 61.4%.

The forward P/E ratio of 7.9 suggests the market remains unconvinced. Now selling at $24.30, the shares are 60% down from their all-time high of $61.70

Pfizer’s raised its dividend for 15 consecutive years. However, the quality of this income stream looks weaker than Verizon’s. Dividend coverage is thin, with a payout ratio of 90.9% and just 1.9 times cash coverage. If earnings come under pressure again, cuts could follow.

Regulatory challenges and patent expirations add further uncertainty. While the yield’s tempting, it’s not without risk.

Final thoughts

Both Verizon and Pfizer look undervalued at current prices. But if I had to pick just one, I’d lean towards Verizon. It has a healthier dividend profile and appears further along in its recovery. 

For investors seeking exposure to US stocks while maintaining strong income potential, I think Verizon’s a stock well worth careful consideration.

The post Down 28%, these 2 high-yielding S&P 500 stalwarts now look like cheap shares appeared first on The Motley Fool UK.

I’m not necessarily looking for massive price growth from my dividend investments. Instead, I’m looking to buy at a reasonable valuation and for increasing dividend payments. If I can find these two elements and the company’s operations are competitive, there’s a good chance I’ll be earning well.

Verizon is a top dividend choice

When I first started researching Verizon (NYSE:VZ), I was impressed by its yield of 6.7%. The company has even managed to increase its dividend by 2% every year on average from 2018 to 2023. It’s likely the company will make a similar increase this year. After all, the company has made no dividend reductions since 2000.

Most people have likely heard of Verizon. It’s the largest US wireless carrier, catering to around 114m phone customers. Its major rival is AT&T, which offers an even higher yield of 6.9% right now. However, AT&T has stopped increasing its dividends. So, I think I might be getting a better deal with an investment in Verizon. That’s primarily because it provides one of the key factors I look for that I mentioned above: dividend growth.

My second key factor was buying at a reasonable valuation. Verizon offers a forward price-to-earnings ratio, which takes into account future earnings estimates, of just 8.6. And because the price is down over 35% from its all-time high, I feel much more comfortable buying the shares now than if it were trading at its peak.

I expect the price to fluctuate, and it might not necessarily even trend upward. That’s fine by me. I wouldn’t be investing for the price; I’d be investing for the dividends. At the very least, I want the shares to fluctuate around the cost I initially paid. After being around for so long, I can’t expect Verizon to grow like a new artificial intelligence company could. Those new tech companies mostly don’t pay good dividends, either.

Dividend investing comes with risks

There are a few sectors of the stock market that are particularly good for income investing. These include utilities, telecommunications, and consumer staples. That means that if I invest with a heavily dividend-oriented strategy, I might become overexposed to a certain set of industries. In turn, I run the risk of being poorly diversified, and any downturn in those sectors could ruin my overall returns.

Additionally, telecommunications companies often carry a lot of debt. This is primarily due to the heavy costs of operations and the need for many strategic acquisitions. That means Verizon is more vulnerable in the case of a major economic recession. I have to remember that in a major crisis it wouldn’t be unwarranted for the firm to decide to periodically reduce or entirely remove its dividend.

Making my call

I consider Verizon an exceptionally strong investment. So, as I’m looking at building out the income side of my portfolio right now, it’s on my watchlist to potentially invest in over the coming year.

The post With a 6.7% yield, I consider Verizon exceptional for passive income appeared first on The Motley Fool UK.

However, I’ve uncovered three US stocks that could secure investors decent value via dividends in 2024.

AbbVie

AbbVie (NYSE:ABBV) is a pharmaceutical giant in the US and the largest company on this list with a $292bn market cap. In addition to being a good dividend payer, it’s a powerful growth stock, up 110% in the past five years.

Its growth could be affected from that one thing that always threatens pharma firms – patents expiring. The patent for AbbVie’s top-selling product, Humira, expired last year, allowing a flood of biosimilar products into the US. It also faces strong competition from Johnson & Johnson and Procter & Gamble, two larger US pharma giants with higher revenue.

Still, AbbVie is doing well enough to pay a decent 3.8% dividend yield, despite earnings per share (EPS) at half the cost of its dividend per share ($2.72 compared to $6.20). Yet that hasn’t affected payments – they’ve been stable and consistent for the past 10 years, increasing from $0.42 to $1.55.

Verizon

Verizon (NYSE:VZ) is one of the largest telecom companies in the US, providing mobile, broadband and wireless services to retail and business clients. It’s the 47th largest company on the S&P 500, with a market cap of $167.8bn and a $39.91 share price. That’s higher than fellow telecom stalwarts AT&T and Comcast but lower than key competitor T-Mobile, which places 40th with a $191bn market cap. 

Verizon’s share price growth has been slow of late, with only a 3.1% gain in the past year. I believe the company is facing a saturated market and the high cost of implementing new 5G technology. 

Fortunately, it has a great 6.7% dividend yield, albeit with a slightly high payout ratio of 96%. That’s because its EPS and dividend per share are very close, at $2.76 and $2.66, respectively. Still, it’s got a solid track record of making payments, with a $0.67 dividend due on 1 May.

IBM

Arguably the world’s oldest computer company, IBM (NYSE:IBM) is still pushing boundaries despite stiff competition from newcomers in the tech industry. It’s the smallest of the three companies on this list, just below Verizon with a $166.4bn market cap.

Although it has a lasting reputation and strong market presence, IBM’s pivot towards AI and cloud computing has been costly. Debt has been rising while revenue has declined, threatening the firm’s profitability. With Microsoft and Amazon taking the lion’s share of this market, IBM may struggle to remain relevant. 

But for now, it’s a strong dividend payer in the US market. The 3.6% yield isn’t great but still better than the S&P 500 average of 1.35%. It currently pays out $6.64 per share, which is sufficiently covered by an EPS of $8.20. So it’s unlikely that the dividend will be cut any time soon.

The post 3 top US dividend stocks for value investors to consider in 2024 appeared first on The Motley Fool UK.

The stock price is currently down over 18% in the past five years, and at around $39 a share, it’s trading well below its 2019 peak of $62.

The drop is primarily attributed to weak subscriber growth in 2022 and, to me, seems exaggerated. As a result of the price drop, the company now has an attractive price-to-earnings (P/E) ratio of 7.76. That suggests it’s a good value stock for me to buy now.

Rising dividends

Despite the Verizon share price dropping over the last few years, dividends have been consistently rising. The company has increased its payouts every year since 2007.

At the current price, the forward dividend yield for 2023 is an attractive 6.7%. That represents a significant percentage increase compared to recent years.

In 2011, the dividend payout per share was $1.97. That’s also the last year, until now, when Verizon was regularly priced under $39. The dividend total for 2023 is projected to be $2.61, based on the first quarter payment of $0.6525.

Therefore, for the same outlay as in 2011, I can expect an extra 1.7% return from their dividends.

Furthermore, in March, CEO Hans Vestberg committed the company to “delivering long term shareholder value“. So I’m not expecting the company’s dividends to break the 16-year increase streak any time soon.

How much would I need to invest?

If I were to buy Verizon shares now, I’d want to target a level of passive income that would help me long term.

Currently, 1,924 shares would generate just over $5,000 — or over £4,000 — of passive income. Paid out quarterly, that works out to a nice sum of £1,000 every three months.

Of course, while now may be a good time to buy, 1,924 shares at $39 would cost $75,036 (£60,426). That’s quite a significant amount for me to invest all at once.

That’s why, if I were to buy Verizon shares today, I would begin by purchasing in multiples of 15 or 60. That’s how many shares I would need to own, at today’s price, to use the dividends to purchase more.

At the current yield, 15 shares would give me a $39 dividend and allow me to add a new share yearly. Alternatively, 60 shares would give me the same $39 payout every quarter, which would enable me to reinvest for a new share every three months.

As I’m around 20 years from retirement, I’d have time to build towards a goal of £4,000 in passive income, or even more. I don’t need passive income right now, so if I were to buy shares, I’d want to reinvest the dividend every quarter.

That would help me grow my passive income earnings until retirement, even if I didn’t buy more shares. However, I’d still have to invest regular amounts to reach my goal.

As we are moving into the new tax year for Stocks and Shares ISAs, I have other investing priorities right now. However, I’ll be revisiting Verizon in the future if the price-to-dividend ratio is still attractive when I have some spare cash.

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Apple

Buffett’s biggest shareholding is tech titan Apple (NASDAQ: AAPL).

Although the share price is up 12% over the past year, it has tumbled in the past few weeks. But Buffett has been buying, not selling, Apple. During the last financial crisis, Apple suffered. But will that be the case this time round?

I think the company is in a stronger position than it was then. For example, the first iPhone only came out in 2007, shortly before the financial crisis began. These days however, Apple has a massive installed base of smartphone users. While they may trade down to a cheaper model, I think many would continue to buy Apple phones, whatever the economic environment, as they are so tied in to Apple’s ecosystem.

Services have grown in importance a lot over the past decade at the company. Last year they made up 18% of the company’s revenue. They had a gross profit margin of 70% compared to 35% on the company’s products. So, in gross terms, service revenues are twice as profitable to Apple as product sales.

It has a massive competitive advantage – what Buffett terms a “moat” – due to its installed user base, service ecosystem and brand. A recession could hurt revenues and profits. But in the long term I expect the business to keep doing well. I would consider buying these Warren Buffett shares for my portfolio.

Verizon

Just like I think many iPhone users would stay loyal during a recession, I also think mobile phone services can be seen as a defensive business area in a downturn. While consumers may shop around for cheaper deals, I expect that most people would continue to use their phones, no matter what happens to the economy.

That could be good news for another share Warren Buffet owns – US mobile giant Verizon (NYSE: VZ). But Buffett has recently slashed his stake in the company. He still reportedly owns around $70m of Verizon shares, but that is just a fraction of what he held before.

The Verizon share price has fallen 14% over the past year. It may lack the glamour of Apple, but I think some of the fundamental business drivers are the same. It has a large customer base, many of whom would face switching costs if they moved to another operator overnight. It has a well-known brand in its key US market. Its large network would be hard and costly for a competitor to copy. That helps give the company a Buffett-style moat in my opinion, even if Buffett himself has been a seller lately.

The high expenditure needed to maintain such a network is one risk I could see hurting profits. But I continue to see value in Verizon and would consider buying these shares for my portfolio.

The post Two Warren Buffett shares I’d buy for a recession appeared first on The Motley Fool UK.

High inflation, rising interest rates, and an uncertain political climate are driving down share prices across the board and fuelling a bear market. With that in mind, here are three stocks that I think fit Warren Buffett’s parameters. I’m buying them as share prices come down.

Amazon

First on my list is e-commerce giant Amazon (NASDAQ:AMZN). The Amazon share price has come down by over 30% since the beginning of the year and I’m using the drop to add to my investment in the company.

Amazon’s declining share price isn’t just the result of general market movements. The company’s most recent earnings report was disappointing – the company announced a loss of $7.56 per share and its stock fell in response.

While I agree that Amazon’s performance in the last quarter was disappointing, I think the market’s response is an overreaction to the company announcing a reduction in the value of its investment in Rivian Automotive. As a result, I see this as a really attractive opportunity to add shares in Amazon to my portfolio. 

StoneCo

I’ve also been buying shares in StoneCo (NASDAQ:STNE) recently. The Brazilian fintech’s stock has also been struggling recently and its shares now trade under $10. Considering Berkshire Hathaway was buying shares at around $31 when the company first became public, I think that the current share price is quite attractive.

Like Amazon, the decline in StoneCo shares isn’t just due to factors affecting the market overall. Higher inflation in Brazil, an over-ambitious investment in Banco Inter, and complications with the company’s loan business have caused the stock to fall over 85% in the last year.

I think that a good amount of the StoneCo’s struggles will subside over time, though. The company’s balance sheet looks strong to me and while I see the risks associated with the stock, I’m happy buying the shares at a greatly depressed price.

Verizon

The last stock that I’m buying at the moment is Verizon Communications (NYSE:VZ). The stock is currently trading on a low price-to-earnings (P/E) multiple of around 9, but I don’t think this tells the full story. 

As a business, Verizon has around $147bn in debt that poses a risk to consider from an investment perspective. That needs to be paid off before returns to shareholders. 

Despite this, I think that the business is attractively priced. Even accounting for the company’s debt, I think that as a Verizon shareholder, I can realistically hope for a return of around 8.56%.

As it is a 5G infrastructure company, I expect demand for Verizon’s services to remain fairly steady for the foreseeable future. Given this, I’m very happy buying shares at the current $48 price.

Summary

Amazon and StoneCo are both companies expecting substantial growth over time. Verizon is more of a solid and steady operation. In the current bear market, I’m happy buying all three.

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