Verizon Beats Q4 Estimates, Unveils $25B Buyback Program
Telecom giant posts revenue of $36.4B, announces $55B shareholder return plan through 2028. Frontier deal closes after regulatory approval.
Verizon delivered exactly what dividend investors wanted: earnings stability and a massive capital return commitment.
The telecom giant reported Q4 2025 revenue of $36.38 billion Friday, up 2% year-over-year and ahead of consensus. Adjusted EPS of $1.09 beat the $1.05 estimate. Shares jumped nearly 12%—the stock's best single-day gain in years.
More significant than the quarter: Verizon announced plans to return approximately $55 billion to shareholders through 2028 via dividends and a new $25 billion share repurchase program.
The Capital Return Pivot
For years, Verizon has been a dividend story. The company pays one of the highest yields in the S&P 500, currently around 6.3%. Buybacks were minimal as the company prioritized network investment and debt reduction.
That's changing. The $25 billion repurchase authorization—with at least $3 billion expected in 2026—signals management confidence in both cash generation and balance sheet strength.
The math works. Verizon generated $9.5 billion in adjusted EBITDA during Q4 and expects continued improvement in 2026. Capex intensity is moderating as the 5G buildout matures. Free cash flow should expand.
For income investors, the commitment matters. The $0.7075 quarterly dividend—a 2.5% annualized increase—extends Verizon's streak of annual dividend growth.
Frontier Integration
Verizon closed its acquisition of Frontier Communications on January 20 after receiving final regulatory approval from California.
The $20 billion deal adds 2.2 million fiber subscribers across 25 states, accelerating Verizon's fixed broadband strategy. Integration will take time, but the strategic logic is clear: fiber provides higher margins than legacy copper and creates bundling opportunities with wireless.
Near-term, expect some merger-related costs to weigh on results. Longer-term, Frontier's subscriber base should contribute meaningfully to both revenue and cash flow.
2026 Outlook
Management outlined expectations for continued modest revenue growth and margin improvement. The guidance wasn't specific on EPS, but analyst estimates cluster around $4.50 for full-year 2026.
Key drivers:
- Wireless subscriber additions stabilizing
- Fixed broadband growth from Frontier integration
- Cost synergies from network consolidation
- Business segment improvement
The telecom sector broadly faces challenges from competition and elevated capex requirements. Verizon's advantage is scale and network quality. Customer churn remains among the lowest in the industry.
Sector Context
Verizon's results contrast with the uncertainty elsewhere in telecom. AT&T faces its own transformation challenges. T-Mobile continues growing but trades at premium multiples.
At roughly 9x earnings with a 6%+ yield, Verizon offers value characteristics rare in this market. The buyback program adds a catalyst that was previously missing.
The 12% rally Friday reflects a re-rating. Investors are beginning to view Verizon as more than just a yield trap—the capital return pivot and Frontier integration suggest a company with improving fundamentals.
What to Watch
Execution matters now. The $55 billion return commitment only works if cash generation meets expectations. Any deterioration in wireless metrics or integration stumbles with Frontier would pressure the story.
Near-term, the stock faces resistance around $47—levels last seen in early 2024. A move above that would confirm the breakout and likely attract momentum buyers.
For income-focused portfolios, Verizon checks multiple boxes: high current yield, dividend growth, and now buyback support. The Q4 results and shareholder return announcement validate the bull case.