High-Yield Stocks for 2026: 2 Better Picks Than Verizon

Motley Fool contributors Jason Hall and Tyler Crowe contend that Verizon’s past media missteps are not the primary reason the stock is likely to remain a mediocre investment, and they favor reallocating yield-seeking capital to United Parcel Service for high current yield and to Marathon Petroleum for dividend growth. The segment is opinion-based investment guidance rather than new company financials; disclosures note Hall holds UPS, Crowe holds none of the mentioned stocks, and The Motley Fool’s recommendations include UPS and Verizon.

Analysis

Market structure: The discussion implies winners are asset-light, cash-generative cyclical names (UPS, MPC) and secular growth tech winners (NVDA, NFLX), while legacy media/telecom (VZ) faces structural headwinds — slower ARPU growth, heavy capex, and limited pricing power. UPS benefits from pricing power in parcel networks and e-commerce density; MPC benefits from refining margin cyclicality tied to crude differentials. Higher oil and tight freight capacity would push those two higher while depressing discretionary consumption-sensitive stocks.

Risk assessment: Tail risks include a recession-driven 15–30% drop in parcel volumes (hurting UPS), an oil-price collapse >25% (cutting MPC cash flows and dividends), or regulatory/antitrust actions on telecom spectrum and M&A (hitting VZ). Immediate risks (days–weeks) are Q4/Q1 earnings and Fed commentary; medium term (3–9 months) are wage-negotiation strikes and refinery turnarounds; long term (1–3 years) are capital intensity and tech substitution in telecom. Watch crack spreads, weekly U.S. freight volumes, and Verizon ARPU trends as hidden dependencies.

Trade implications: Construct size-weighted exposure: favor UPS (income + defensive cyclical) and MPC (dividend-growth cyclicals) over VZ. Use options to express directional views: covered calls on UPS to enhance yield, call spreads on MPC around seasonal refinery tightness, and put spreads on VZ to limit cost of a downside hedge. Rotate capital from long stagnant telecom to commodity/cyclicals if oil holds above $80/bbl and freight PMI >50.

Contrarian angles: Consensus underestimates VZ’s buyback/free-cash-flow optionality — a disciplined buyback program could stabilize shares if capex normalizes; conversely, investors may be overpaying for cyclical dividend stories if oil/crack spreads reprice lower. Historical parallels: 2015–2016 energy cycles show MPC can deliver >30% total returns on refinery up-cycles but reverse sharply on demand shocks. Unintended consequence: crowded yield-seeking flows into UPS/MPC increase sensitivity to macro volatility and rate moves.

Key Decisions for Investors

• Establish a 2–3% long position in UPS (NYSE: UPS) now, adding up to an additional 1–2% on a 5–8% pullback or if forward yield rises above 4.5%; set a 10% stop-loss and target 12–18% total return in 12 months.
• Build a staggered 2% long in Marathon Petroleum (NYSE: MPC): 50% immediately, 50% on any 6% drawdown. Hedge with a 3-month call spread (buy 1 strike, sell higher strike) rather than naked calls; reduce exposure if Brent crude falls below $70/bbl for >30 days.
• Trim Verizon (NYSE: VZ) to underweight or hedge existing holdings by buying a 3-month put spread ~7–15% OTM sized to 0.5–1% of portfolio; add to hedge if next quarter shows ARPU growth <2% YoY or if guidance is cut.
• Execute a pair trade: long UPS (2%) vs short VZ (1%) to express preference for cash-generative logistics over stagnant telecom; rebalance if spread narrows by >8% or if weekly U.S. parcel volumes contract >10% vs prior year.