The Dogs of the Dow investing strategy is appealing for income investors. The strategy calls for investors to buy shares of the 10 stocks in the Dow Jones Industrial Average with the highest dividend yields. The Dogs of the Dow is a simple strategy, yet is highly effective for income investors trying to boost their portfolio yield.

Verizon Communications (VZ) is one of the highest-yielding stocks in the Dow Jones Industrial Average, making it a top pick for an investor using the Dogs of the Dow strategy.

Business Overview and Recent Events

Verizon is one of the largest wireless carriers in the United States, with a network that covers nearly 300 million Americans. Verizon stock has a market capitalization of $240 billion. Verizon reported strong financial results for the fourth quarter and full year 2018. The company’s adjusted earnings-per-share (EPS) totaled $1.12 for the quarter, representing growth of more than 30% from the year-ago period.

For 2018, Verizon had adjusted EPS of $4.71, a 26% increase from 2017. Revenue grew 4% to $131 billion. The wireless business had 1.2 million retail postpaid net additions in the quarter, 873,000 of which were smartphone adds. Subscriber additions totaled 16.4 million in 2018. Wireless revenue grew 2% for the quarter and 1.5% for the year. Wireline revenues declined 3.2% for the quarter and 3% for the year, but this is a fairly small component of Verizon’s business. Overall, the company saw a 41% increase in cash flow from operations in 2018 while free cash flow more than doubled, to $17.7 billion from $7.1 billion in 2017.

Future growth will be driven by the continued strength of its Wireless segment as well as new initiatives such as the introduction of a 5G network. Verizon expects to unveil 5G service in the first half of 2019. Another growth catalyst for Verizon is the Internet of Things, or IoT, which will power connectivity outside of just smartphones and tablets. Verizon has made multiple acquisitions to boost its IoT business in recent years, including the $2.5 billion acquisition of Fleetmatics, and the $900 million acquisition of Telogis.

This Dog Has Plenty of Bark

When it comes to dividends, Verizon is tough to beat. The stock has a high dividend yield of 4.2%. Verizon has grown its earnings-per-share by approximately 5% per year over the last decade. This rate of growth is sustainable for Verizon over full economic cycles, due to the company’s competitive advantages and dominance of the U.S. wireless industry.

Verizon has increased its dividend for over a decade and should continue to raise its dividend each year in line with the company’s rate of EPS growth. Verizon is on pace for a payout ratio of just 51% for fiscal 2019.

With a dividend yield exceeding 4%, Verizon is highly attractive for income investors. The S&P 500 Index as a whole has an average dividend yield of 2% right now, meaning Verizon offers more than twice the dividend income as the average S&P 500 dividend stock.