Shares of Verizon Communications (VZ) have fallen 15% this year and now trade at a level not seen since 2017, Morgan Stanley analyst Simon Flannery tells investors in a research note.

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The dividend yield now stands at 5.8%, good for number 10 in the S&P 500 Index, the analyst points out. In addition, Flannery expects the company to announce its 16th annual dividend increase around September 1 with a 2% boost. Verizon's dividend is well covered, representing a 50% payout on earnings, and a 58% payout on 2022 free cash flow, writes the analyst. While he thinks the stock is "inexpensive," Flannery remains on the sidelines as he does not see a "strong catalyst to drive a re-rating in the near term."

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