Verizon (VZ 0.40%) has gone on a nice run over the past several quarters. Shares of the telecom giant are up about 33% since late 2023. That has outperformed the S&P 500's (^GSPC -0.17%) more than 20% rally during that period.

You might be wondering if it's too late to invest in Verizon. Here's why you still have plenty of time to buy the telecom stock.

NYSE: VZ

Verizon Communications
Today's Change
(0.40%) $0.17
Current Price
$44.48
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VZ

Key Data Points

Market Cap
$188B
Day's Range
$44.22 - $44.68
52wk Range
$37.59 - $47.35
Volume
21,795,311
Avg Vol
26,420,751
Gross Margin
46.59%
Dividend Yield
6.06%

Why Verizon is a buy

Verizon has spent the past several years investing heavily in building out faster 5G and fiber networks to better compete with rivals like AT&T. That heavy investment phase put some pressure on its balance sheet as its leverage ratio rose. That caused concerns about whether Verizon could continue paying and growing its lucrative dividend (more than 6% current yield and 18 years of growth).

However, those investments finally started paying dividends last year. Verizon added more than 1 million new postpaid mobile and broadband subscribers in the fourth quarter, its best quarterly result in over a decade. The company also delivered improved profitability and strong free cash flow as its capital spending declined. That enabled the telecom company to produce significant excess free cash flow after paying dividends, which it used to repay debt (leverage fell from 2.6 times in 2023 to 2.3x at the end of last year).

Verizon expects continued growth in 2025 and beyond. Its capital investments should deliver organic revenue and earnings growth. It's also using its improving balance sheet to buy Frontier Communications in a $20 billion all-cash deal to expand its fiber network.

Meanwhile, despite the rally in its stock price, Verizon still trades at a very inexpensive valuation. It trades at less than 10 times its forward P/E ratio, a more than 50% discount to the S&P 500's level.

That low valuation is the biggest reason why there's still plenty of time to buy Verizon. It enables you to lock in a very lucrative dividend while participating in the future upside potential of the stock, which could be substantial as Verizon revs its growth engine back up.