Verizon (VZ +5.72%) reported second-quarter results on Friday morning, July 24, and the numbers themselves gave income investors plenty to like. But the most interesting disclosure came on the earnings call. CEO Dan Schulman said the telecom giant has signed an agreement worth more than $1 billion to supply dark fiber to Google, the search and cloud company owned by Alphabet, which will use it to connect its data centers.
Dark fiber is fiber-optic cable that the customer leases and lights up with its own equipment, giving it dedicated capacity between facilities. And demand for it is coming from exactly the customers with the deepest pockets in the market right now: companies building out data centers for AI (artificial intelligence).
Meanwhile, at about $46 per share, the stock’s dividend yield sits near 6.3%. This makes it a great dividend stock for income. So the question for income investors is whether a new AI infrastructure revenue stream changes the case for owning a high-yield telecom.
I think it does, and in the right direction.
Image source: Verizon.
A growth business Verizon is expanding
Schulman told analysts the Google agreement is only the start. He said Verizon expects to announce additional deals by year-end that, taken together, could be worth multiple billions of dollars in revenue over the next several years. The company’s low-latency fiber network, he argued, has become exactly the kind of asset AI data centers need.
Management clearly wants investors to see a turning point.
“Our core connectivity business is gaining momentum, and with the emergence of AI infrastructure revenue, we are fundamentally reshaping Verizon’s growth trajectory,” Schulman said in the company’s second-quarter earnings release.
Of course, some perspective keeps this honest. Verizon generated $34.3 billion of total revenue in the second quarter alone, so a fiber agreement worth more than $1 billion spread over several years is small.
But it lands in the right place. Verizon’s business segment, which has spent years as the company’s sleepiest corner, grew revenue just 2.6% year over year to $7.2 billion in the quarter, though the segment’s operating income jumped 37%. A multibillion-dollar pipeline of long-duration fiber contracts would give that segment a reason to grow that it hasn’t had in years.
The dividend math got better again
Now for the part income investors care about most.
Free cash flow for the first half of 2026 came in at $10.2 billion, up 16% from $8.8 billion a year earlier. Dividends paid over the same six months totaled $5.9 billion. In other words, the payout consumed less than 60% of the company’s free cash flow, leaving billions for debt reduction and buybacks.
And the guidance is moving the right way. Management raised its full-year outlook for the second consecutive quarter, now calling for free cash flow growth of 9% to 10% and adjusted earnings per share between $4.99 and $5.04, or growth of 6% to 7%. Additionally, second-quarter adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $13.7 billion, up 7.2% year over year, was the highest the company has ever reported.
The trajectory may matter even more than the levels. Mobility and broadband service revenue grew 2.8% year over year in the second quarter, and management expects growth to approach 3% in the third quarter and about 4% in the fourth — an acceleration, not a plateau.
Subscriber momentum supports the forecast. Verizon delivered 184,000 total postpaid phone net additions, along with its best consumer second-quarter postpaid phone result in five years, and more than 550,000 total mobility and broadband additions.
Of course, this is still a slow-growing business. Total revenue actually fell 0.7% year over year, dragged down by a nearly 20% drop in equipment revenue as upgrade volumes fell and Verizon pulled back on device subsidies. Earnings per share also fell 22%, mostly on special items (the largest a $746 million loss tied to classifying its international wireline connectivity and managed network services business as held for sale), though adjusted earnings per share rose 6.6%.
Today’s Change
(5.72%) $2.51
Current Price
$46.33
Key Data Points
Market Cap
Day’s Range
$43.98 – $46.33
52wk Range
$38.39 – $51.68
Volume
2.2M
Avg Vol
27M
Gross Margin
45.50%
Dividend Yield
6.38%
But that’s exactly why Friday’s disclosure matters. For years, the dividend case rested on cost discipline and a slow-growing connectivity business. Now cash flow guidance is rising, subscribers are coming in, and there’s a new revenue stream attached to the biggest spending wave in technology. The payout was already well covered. If Schulman delivers the deals he’s promising, the conversation starts to shift from covering the dividend to growing it.
So I’d be comfortable owning the stock here for the income. The 6.3% yield pays investors well today — and Verizon finally has a growth story worth watching while they collect it.
