How to Buy Verizon and Its 7.5% Dividend Yield With Low Risk

Verizon stock is hitting 52-week lows on Friday after disappointing earnings. But for the bulls, a low-risk long setup may be near.

Author:

Bret Kenwell

Publish date:

Oct 21, 2022 4:14 PM EDT

Shares of Verizon are not seeing the reaction to its earnings report that AT&T  (T)  did when the latter rallied more than 10% at one point on Thursday.

Verizon  (VZ)  shares instead are moving lower on Friday, falling about 5% after its disappointing quarter.

Earnings fell 7% year over year to $1.32 a share, missing expectations of $1.29 a share. Revenue climbed 4% and barely topped expectations. The company’s post-paid additions missed estimates, too.

On the plus side, the company reiterated its full-year earnings outlook, but that’s not quite as good as the top- and bottom-line beat and raised guidance that AT&T delivered yesterday.

As a result, Verizon shares are now hitting 52-week lows. That’s despite a dividend yield that has swelled to roughly 7.5%.

Of course, it doesn’t help that AT&T just reported good results — making it potentially more attractive to telecom investors, even as it pays a 6.5% dividend yield.

Daily chart of Verizon stock.Chart courtesy of TrendSpider.com

On the charts Verizon has some constructive price action even as it hits a one-year low. That’s not often the case.

Verizon stock dipped below the prior 2022 low of $35.04, hit $34.55 and then reclaimed $35.04.

Look at it this way: The stock broke to a new low, then reclaimed the prior low. That’s known as a reversal and it could have bullish traders long Verizon if it can close back above $35.04.

They would likely use a stop-loss just below the new low. And they’d look for a gap-fill at $36.55 and a test of the declining 10-day.

Above that puts $38 and the 21-day in play.

On the downside, to be sure, a break and close below $34.55 opens more downside for Verizon stock.

I’m not sure that Verizon would fall this far, but it could open the door for a dip down to the low $30s, where we find the 78.6% retracement as measured from the 2019 high to the 2008 low.

The bottom line: Keep an eye on $35.04; it’s the key pivot in the short term. 

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