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Verizon (VZ) is an American telecommunications company that also ranks as the second-largest wireless carrier in the United States. The company earns nearly 85% of adjusted earnings from its wireless business and ranks as the best coverage phone carrier in the U.S. because of quick 4G LTE speeds.
For years Verizon has been able to have both revenue and net income in the billions of dollars, but their numbers have stagnated because the telecommunications sector has become saturated. In September of 2020 Verizon announced that it agreed to buy prepaid wireless service provider Tracfone from the Mexican company America Movil (AMX) for $6.25 billion in cash and stock. An acquisition of this size can be seen as way for Verizon to grow their business and revenues while simultaneously combating competition, but will it?
Because of stagnation, Verizon has marginally underperformed the broader market for the past three years and many growth investors are skeptical about holding the company's stock for the long-term. On the flip side dividend investors are keen on the stock because it yields a 4.24% dividend that pays out quarterly and is a defensive stock in their portfolio. But after their most recent acquisition and 5G at the horizon, will Verizon be able to achieve massive growth and be a 5G buy for 2021?