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The purpose of this article is to determine the attractiveness of Verizon Communications Inc. (VZ) as an investment option. To do so I will look at VZ's recent performance, review its most recent annual and quarterly reports, and discuss current trends in the industry to determine where the stock may be headed from here.

First, a little about VZ. Verizon is a holding company and a provider of communications, information, and entertainment products and services to consumers, businesses and governmental agencies. It operates in two primary segments called Verizon Wireless and Wireline. The products and services include wireless voice and data services and equipment sales, Internet access, broadband video and data, Internet protocol network services, network access, long distance and others. VZ operates in over 150 other countries worldwide and competes with the likes of AT&T, Sprint/Nextel, and Time Warner Cable, among many others. The stock is currently trading at $48.48/share and pays a quarterly dividend of $.51/share, which translates to an annual yield of 4.21%. Year to date the stock is up just over 12%, excluding dividends, and over the past 52 weeks the stock is up over 18%, excluding dividends.

Clearly, VZ has been performing well. To gain greater insight into this performance, I reviewed the company's latest 10-Q and 10-K reports. The 10-Q compares VZ's 1st-quarter performance from the start of 2013 with both its 1st-quarter results of 2012, and the 4th-quarter results of 2012. The first thing that jumps right out at me is that net income has risen sharply in the year-over-year period and is up over 24%. That is an encouraging sign as consumers have been upgrading to new devices and extending contracts with the carrier. Another positive area is the 8.6% increase in wireless service revenue from 2011 to 2012. Wireless has certainly been the important growth story in this industry, and is undoubtedly where growth will be in the near future. Overall revenue growth over that same time period was at just under 4.5%, demonstrating solid growth for the company. This also shows that VZ's growth in the wireless area is outpacing its growth in other segments, demonstrating that VZ is capitalizing on this emerging trend toward wireless in both consumer and business lines.

Another benefit is that VZ has been continuing with its ambitious stock buy-back program, in which, back in 2011, the Board of Directors authorized a repurchase plan of up to 100 million shares, that must be made prior to February 2014. While there are numerous reasons why a company will initiate stock buybacks, a large program like this is often designed to reward shareholders and it can be inferred that management believes the shares are currently undervalued, or that the company has reason to believe there will be stock appreciation in the future. Both of these reasons are cause to be optimistic about the stock.

A final reason I like Verizon's stock has to do with its dividend history. VZ has a solid history of paying dividends since 1987 and has never decreased its dividend payout, even during the 2008-09 recession. While the yield has come down some given the stock's rapid appreciation, it still stands above 4%, making it an attractive source of steady income. Coupled with the fact that VZ's payout is very reliable, given the company's commitment to it and steady cash flows, this is definitely an option for income-seeking investors. Because of its dividend record, VZ is also a component of some ETFs, such as the popular SDY, among others, so investors can gain exposure to this stock by buying a variety of assets.

As with any investment, VZ's stock does not come without risks. The company is in a heavily competitive industry and operates against many domestic carries around the globe in many different regulatory environments. Navigating this competition and regulation requires constant flexibility and the ability to stay ahead of consumer trends. Verizon is frequently a market leader in incorporating new technologies, but that may not always be the case. Additionally, the company faces multiple litigation risks, including a recent lawsuit regarding the bankruptcy proceedings of FairPoint Communications, Inc. This trial began in May 2013, and the company has set aside a portion of cash reserves to cover expenses related to this, and other legal proceedings.

Bottomline: Verizon operates in a highly competitive industry, but has positioned itself as a market leader and has seen impressive growth in both revenue and income. As more consumers move to mobile devices and data plans, Verizon is well positioned to capitalize on these trends, both in the U.S. and around the globe. In fact, VZ's growth is being fueled by this connection growth around the world and because of strong demand for smartphones and data devices. Coupled with the fact that Verizon pays a safe and lucrative dividend, it can be viewed as both a defensive and growth play. In my opinion, investors should consider initiating new positions at current levels.

Source: Verizon Is Calling, Pick Up The Stock