This Stock Offers a 6% Dividend Yield and Looks 14% Undervalued

Verizon Communications is an attractive stock to buy today: It offers income, value, and upside. Its plump 6% dividend yield should appeal to income-seekers. Investors who’d like to rebalance into value stocks after the recent upswing in growth stocks should consider Verizon, too. Best of all, shares of the wireless leader trade 14% below our $53 fair value estimate, suggesting double-digit upside. Verizon was one of Morningstar Chief US Market Strategist Dave Sekera’s stock picks on a recent episode of The Morning Filter podcast.

Verizon has long prided itself on network quality, consistently investing in wireless and fixed-line technologies. It has built its brand reputation around these networks, attracting a large and loyal customer base. The company holds roughly 35% of the US wireless postpaid phone market; this leading scale enables Verizon to generate the highest margins and returns on capital in the industry. However, AT&T T and T-Mobile TMUS have steadily chipped away at Verizon’s market share lead, a trend we expect will continue. Verizon hopes to modestly improve customer growth in 2026, but we were pleased to hear that it still expects to lag AT&T and Verizon, with each company gradually moving toward responsible growth and parity.

Key Morningstar Metrics for Verizon

• Fair Value Estimate
  : $53
• Star Rating
  : 4 Stars
• Economic Moat Rating
  : Narrow
• Uncertainty Rating
  : Medium

Economic Moat Rating

Verizon’s moat stems from the wireless industry’s efficient scale characteristics. The wireless business produces 75% of service revenue but contributes nearly all of Verizon’s profits. We estimate wireless returns on invested capital were about 16% before 2021. Heavy investment to acquire spectrum and subsequent spending to put that spectrum to use have pulled wireless returns on capital to the low double digits, by our estimate, still ahead of Verizon’s cost of capital. Providing solid nationwide coverage requires heavy fixed investments in wireless spectrum and network infrastructure. The benefits of fixed-cost leverage and the difficulty of providing a differentiated wireless offering create an efficient scale advantage.

Read more about Verizon’s moat rating.

Fair Value Estimate for Verizon Stock

Our $53 fair value estimate equates to roughly 7.6 times our 2026 EBITDA forecast. We forecast 2026 wireless service revenue to be flat year over year but still grow about 2% annually over the next five years, with acceleration to 3% in 2028 after most customers move to new rate plans. After a bump from the Frontier acquisition in 2026, we expect consumer fixed-line revenue to grow 5% annually through 2030. We believe the fixed-line business services segment can return to growth over the next several years. We expect consolidated adjusted EBITDA margin to hold roughly flat over the next five years at about 36%. We forecast capital spending of about $16.2 billion in 2026, gradually ramping back up to meet customer demand and remain in line with rivals.

Read more about Verizon’s fair value estimate.

Risk and Uncertainty

Verizon primarily faces regulatory and technological uncertainties, as well as the potential for irrational competition. Wireless and broadband services are often considered necessary for social inclusion in terms of employment and education. If Verizon’s services are deemed insufficient or overpriced, especially in response to weak competition, regulators or politicians could step in. Regulators control wireless spectrum licensing, which creates opportunities to influence the wireless industry. Evolving technology could eventually lower barriers to entry for companies that have long wanted to enter the business, including the large cable companies.

Read more about Verizon’s risk and uncertainty.

Verizon Bulls Say

• Verizon’s network focus over the past 15 years has resulted in the industry’s broadest wireless coverage, and its reputation with most customers is sterling.
• With the largest customer base in the US, Verizon is the most efficient carrier in the industry, delivering better profitability than its rivals. Combined with a growing fiber footprint, the company also enjoys economies of scope.
• Verizon shares offer a fantastic dividend yield. The payout consumes less than 60% of free cash flow, providing plenty of cushion to maintain this income stream for shareholders.

Verizon Bears Say

• Rival carriers have rapidly deployed new spectrum and technology to add coverage and capacity. Verizon’s network leadership is a thing of the past, and recent price increases have soured its reputation with customers.
• Verizon’s fixed-line business is a disaster, earning minimal profits and facing years of high costs necessary to support declining revenue.
• Verizon’s balance sheet isn’t the fortress it once was. Because of the dividend, paying down debt takes time, limiting strategic flexibility and shareholder returns after periods of heavy investment.

This article was compiled by Susan Dziubinski and Sylvia Hauser. Data as of June 9, 2026, close unless otherwise noted.