"While more affluent individual and business users have been using Smartphones such as the Blackberry, Palm, or iPhone for years, penetration of this market remains small and growth in future years should be strong. Verizon is well-positioned to capitalize on this trend.

"The other side of Verizon's business is wirelines. The wireline business remains weak and represents a drag on the company's overall performance. Wireline revenues are declining, as businesses and individuals continue to shed traditional phone lines at a rapid pace.

"However, Verizon is moving away from this highly regulated (albeit profitable) part of its business. Indeed, the company recently agreed to sell rural wireline assets in 14 states to Frontier Communications in a deal worth about $8.6 billion, the majority of which will be paid in Frontier stock.

"VZ has defensive characteristics as a result of its subscription-based revenue model. Wireless and wireline users pay recurring monthly fees to the company.

"These recurring fees provide good visibility and a consistent stream of revenues. The company also pays a very attractive dividend yield of 5.9%, which should support the stock price.

"Despite strong performance, Verizon wasn't spared in the recent bear market. Shares of the company have declined 21% over the past year. But compared with a 32% decline in the S&P 500, the stock has performed well.

"While Verizon isn't dirt cheap, the valuation is reasonable. Verizon's shares are trading at a trailing P/E multiple of 12. This valuation is slightly higher than its primary competitor, AT&T, but it's below Verizon's five-year annual average P/E range of 13.6 - 16.

"On the horizon, Verizon should be offering the very popular Palm Pre Smartphone by the end of the year. Currently, the Pre is offered only on the Sprint network.

"There is also speculation that Verizon will make a deal with Apple to market the wildly popular iPhone on its wireless network after Apple's exclusivity deal with AT&T expires in 2010.

"Verizon is in the process of moving from its current 3G technology (EVDO Rev A) to a new technology called 4G Long Term Evolution (LTE), which it plans to start offering in the next year in about 25 markets.

"This higher-speed network, which will be better at supporting bandwidth-intensive activities, should increase demand for wireless data usage and use of laptop connection cards even more.

"For 2009, analysts expect Verizon to earn $2.53 per share on revenues of $107.88 billion. This represents no growth in earnings, but an 11% increase in revenues. The future for Verizon appears bright, and the valuation should improve as a result.

"Based on 2009 EPS estimates, and assuming the valuation increased closer to a market multiple of 14.5-times earnings, shares should trade at $36.70. This represents a 19% increase from the current share price.

"And even if the valuation doesn't improve, shareholders will be collecting a nearly 6% dividend from the company. Verizon looks like a safe growth investment that will pay dividends for shareholders in the years to come."

Steven Halpern's TheStockAdvisors.com offers a free daily overview of the favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.