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Verizon (NYSE:VZ) offers conservative investors a 5.1% annual dividend in the mature telecom sector. Telecom product offerings have grown due to advancements in smart phones and related accessories. Verizon's 5.1% dividend is a reasonably safe yield based upon Verizon's entrenchment within the diversified telecom sector. I highly recommend Verizon as a secure dividend stock for most conservative income investors.

Verizon Dividend Yield

The below chart highlights Verizon's ability to outperform the SP500 over the past 5 years. The company has increased its annual dividend by 3% over the past 2 years. The current yield is 5.1% as the shares are trading at $39 per share.

Business Strategy

While the world of cellular phones has become almost overpopulated, according to some, there are always more and more individuals looking to have more technology, more applications, and more convenience in the world around them. Verizon is considered by many to be the industry leader in the cellular phones and other mobile technology fields. They not only have the ability to continue to provide more and more when it comes to communications and customer service, but as the market for apps and other devices increases there will certainly be a great market for Verizon to venture into or refine.

Customer Service

Verizon does very well in customer service ratings. Consumer reports rated Verizon Wireless near the top in a December 2011 report.

Market Share

Verizon stands close to the top of the field in the technology and communications sector. AT&T (NYSE:T) has a larger market cap, $180 billion, compared to Verizon's market cap of $110 billion. While the pure size of AT&T may be overwhelming in nature, Verizon does have plenty to be intrigued by. Not only does Verizon come in at second place with the largest market cap, they completely dominate the rest of the competition besides AT&T. Sprint-Nextel (NYSE:S) has a market cap of $6.98 billion.

In many cases you will be tempted to go after a market leader and be able to feel a bit more safe sticking with the winner of the industry. However, while that strategy works for many, you might want to think about this industry as a two person race where either company can bring you significant success.

Some short term numbers to consider are that Verizon currently posts a 6.49% profit margin as well as a 6.77% return on assets. Revenue per share is currently listed at $38.44 while quarterly revenue growth over the past quarter is 5.40%.

Verizon Long Term Growth Strategies

There will continue to be more and more information revealed about Verizon's long term strategies as time continues in the next few months. However, as of now there are a few major headlines creeping up to help paint the picture for Verizon's future. First and foremost, Verizon has spent, for growth opportunities, over $200 million in the Florida area in 2011 alone.

In late August, Verizon closed on the acquisition of CloudSwitch. CloudSwitch provides cloud software technology. This will provide Verizon a proven platform to expand enterprise cloud services and integrate cloud technology within the smart phone space.

Verizon, in December 2011, purchased additional advanced wireless services (AWS) spectrum. Verizon Wireless purchases 20 MHz of AWS spectrum for $3.6 billion from SpectrumCo LLC. Spectrum is a joint venture between Comcast, Time Warner Cable and Bright House. This will provide help in new and growing mobile markets.

In the below table, readers can note analysts' expectations for Verizon's 10 year earnings and dividend growth:

Another major issue to keep eyes on in the coming weeks will be the spending for Verizon (and how it compares to AT&T). There are a few different studies suggesting that spending by a top technology giant like Verizon can lead to an improved performance for both the company but also the technology sector as a whole. It could be interesting to see whether or not this sort of effect benefits Verizon and many of the companies it deals with as well as the overall tech industry as a whole.

Competition

AT&T is the world's largest telecom holding company. The company is the largest within the U.S. Verizon is number two to AT&T. AT&T and Deutsche Telekom previously disclosed that the proposed acquisition discussions of T-Mobile USA would cease. AT&T will pay a cash break up fee of $3 billion and recognize an additional charge of $1 billion for the transfer of spectrum assets in the fourth quarter, 2011.

As the below table illustrates, AT&T has slightly under performed Verizon in total annualized return. Secondly, AT&T has not increased their dividend at the same growth rate as Verizon. The dividend growth rate difference between Verizon and AT&T is minor. Part of this is due to the extensive debt loads on both companies' balance sheets.

Vodafone Group Plc (NASDAQ:VOD) provides global mobile telecommunication services worldwide. The company offers mobile voice services, messaging services, cell phone data services, and fixed broadband services to over 370 million customers. Vodafone owns 45% of Verizon Wireless. The company pays a 3.6% annual dividend yield based upon today's price of $27.17 per share.

Action

No company is ever a sure thing, so Verizon should not be considered as such. In a world where technology allows for instantaneous changes and updates (ironically, what Verizon has actually built), there is nothing more important than understanding the changes that can occur in no time.

However, while Verizon is subject to all of the fast paced changes that are present in a technology sector, they are also very secure and built-in within the technology field. They are a stable company that hasn't experienced a significant amount of turmoil either as a company or within the industry.

It would be a bit too risky to suggest that Verizon is simply a buy and hold company. At the same time they have been steady more than almost any other company could claim. If you are looking to find a company that has continued to find more and more success and improve from top to bottom then Verizon is at the top of the list right now.

In the future the most important updates to consider would be anything that could increase the functionality and demand of mobile communications (either apps or services). It would also be wise to understand new technologies that could come about and render the mobile phone and mobile device technology obsolete. While that could definitely happen sometime down the line it doesn't seem likely in the near future.

Verizon's beta is only at 0.52 and that continues to preach to the idea that Verizon is a completely stable company. There are obviously always going to be risks with any company, but there is a reason that beta is used in order to evaluate stocks.

Verizon looks to be an excellent buy for the investor who is looking for a steady dividend. I recommend conservative income investors purchase Verizon shares at $39 for a 5.1% annual dividend yield.

Disclosure: I am long T, VZ, VOD.

Source: Verizon Remains A Reliable Dividend Income Holding