Verizon (VZ): 'Steady-Eddie'

"The traditional U.S. telecom sector has been viewed as a stodgy backwater. Investors looked down their noses at what used to be called the Regional Bell Operating Companies. But that's just fine with us.

"What's more, many of the Baby Bells are now transforming their business by expanding into new, growing markets - without shedding their high-dividend ways.

"Verizon is the product of mergers over the years that combined the old NYNEX, Bell Atlantic, MCI, and GTE. Yes, the traditional landline business is slowly fading and Verizon plans another 8,000 layoffs in that sector.

"But most consumers who cut their traditional service are shifting to wireless, and that's good news for Verizon, the country's largest cell phone provider.

"In the second quarter, it added a net 1.1 million subscribers, swelling its ranks to 87.7 million overall and thrusting it well ahead of AT&T's 79.6 million.

"Overall, the company earned $1.48 billion, or 52 cents per share in the June quarter. If you exclude special items, you get 63 cents - ahead of the consensus forecast of analysts.

"Revenue gained 11% to $26.9 billion, aided by the acquisition of the wireless company Alltel. Verizon is also expanding its fiber optic network business.

"Dubbed FiOS, the network allows Verizon to offer high-speed Internet and cable TV service direct to consumers; and its number of subscribers has surged 82% to 2.5 million.

"The company is currently paying out a quarterly dividend of 46 cents per share, good for an indicated yield of 5.78%. We recommend purchase of the stock."

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