Why Verizon Communications Lagged the Dow Today
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
The Dow Jones Industrial Average has fallen 0.15% as of 3:25 p.m. EST without much in the way of major data to drive stocks. Regulators did approved the Volcker rule, which is supposed to keep big banks from making risky bets with either customer money or their own money. But the rules have been watered down enough that they won't likely have a huge impact on big banks. Dow components JPMorgan Chase and Goldman Sachs are actually up after the regulations passed.
The big banks will still be huge and with complex global operations, and while they may not be able to take the risks seen in past years there's no doubt there will still be plenty of risk from too big to fail.
Verizon has a not-so sunny day
One stock not keeping up with big banks is Verizon Communications , which has fallen 1%. Yesterday, the company announced the acquisition of EdgeCast, a provider of content delivery networks. As fellow Fool Anders Bylund pointed out, the reported $390 million acquisition price is pretty steep for a company with about $100 million in revenue and little profit. But time will tell if the deal pays off.
Today, the news is that Verizon Wireless is willing to accept unused airwaves for spectrum it's trying to sell. T-Mobile is the likely bidder for a 700-megahertz A-block spectrum Verizon Wireless is trying to unload; it could offer other spectrum or cash for the asset. T-Mobile raised $3 billion in financing over the past month and has the flexibility to make a deal happen.
Verizon Wireless could be helping a competitor by selling spectrum to T-Mobile, but the asset isn't doing a lot for Verizon right now. This could be a good deal in the long term, especially if Verizon Wireless can acquire some spectrum it needs to expand coverage.
A buying opportunity
The EdgeCast acquisition is pretty small compared to Verizon's $140 million market cap and the asset sale may actually help the company's balance sheet or spectrum assets. So while Verizon Communications may be lagging the Dow today I think it's still a good buy for investors. The mobile market isn't going anywhere, and a 4.1% dividend yield is a great payback for investors considering the low interest rate environment.
Dividends are a great long-term bet
Verizon is a great dividend stock and one of the dirty secrets that few finance professionals will openly admit is the fact that dividend stocks as a group handily outperform their non-dividend paying brethren. The reasons for this are too numerous to list here, but you can rest assured that it's true. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.
The article Why Verizon Communications Lagged the Dow Today originally appeared on Fool.com.Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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