Legendary Investor Bill Miller's Fund Is Loading Up on This 6.3%-Yielding Dividend Stock. Here's Why I Plan to Buy More of It, Too.

Miller Value Partners, now led by Bill Miller IV, initiated a new position in Verizon Communications (VZ) during Q1 2025, purchasing 198,000 shares worth $8.98 million, making it the fund's eighth-largest holding at 4.09% of the portfolio; this move appears to be a trade within the telecom sector as the fund simultaneously reduced its stake in AT&T by roughly 78%. Verizon's appeal stems from its attractive valuation with a forward P/E of 9.2, solid business performance including year-over-year growth, and a dividend that has been increased for 18 consecutive years, despite a considerable debt load.

Analysis

Miller Value Partners, under the new leadership of Bill Miller IV, established a significant new position in Verizon Communications (VZ) during the first quarter of 2025, acquiring 198,000 shares valued at $8.98 million as of March 31, 2025. This investment instantly made Verizon the hedge fund's eighth-largest holding, constituting 4.09% of its total portfolio. This strategic allocation appears to be part of a sector rotation, as the fund concurrently reduced its stake in AT&T (T) by approximately 78%, relegating AT&T to one of its smallest holdings. Verizon's appeal to the value-oriented fund is attributed to several factors: an attractive forward price-to-earnings ratio of 9.2, notably lower than AT&T's 13.4; robust Q1 business performance, including year-over-year revenue and earnings growth, industry-leading wireless service revenue of $20.8 billion, its best wireless retail core prepaid net additions since acquiring TracFone in 2021, and its highest-ever adjusted EBITDA with the strongest growth rate in nearly four years. Furthermore, Verizon's dividend, which has seen 18 consecutive years of increases, is supported by a soaring free cash flow of $3.6 billion in Q1 2025, up from $2.7 billion in the prior-year period. Future growth is anticipated to accelerate with the expected closure of the Frontier Communications acquisition in early 2026. While Verizon carries a substantial net unsecured debt of $115.1 billion as of Q1 2025, this figure represents an $11 billion reduction year-over-year, and the company's management has communicated a "clear pathway for meaningful debt reduction" prior to the Frontier transaction.

Key Decisions for Investors

• Investors should evaluate Verizon (VZ) as a potential value investment, considering its Q1 2025 fundamental strength, attractive forward P/E ratio of 9.2, and consistent dividend growth supported by strong free cash flow generation.
• Monitor Verizon's progress on its planned debt reduction and the successful integration of Frontier Communications, expected in early 2026, as these are key catalysts for potential upside and risk mitigation.
• The substantial portfolio shift by Miller Value Partners out of AT&T (T) and into Verizon (VZ) may signal a relative value opportunity within the telecommunications sector, prompting a review of existing telecom allocations.