Should you buy Verizon stock on the weakness post Q2 report?

Verizon Communications Inc (NYSE: VZ) has lost 10% in less than a week, much of which was related to its Q2 report on Friday. Still, the Chief Investment Officer at the Bahnsen Group remains constructive on the telecom stock.

Verizon did not have a promising Q2

Lower-than-expected earnings, trimmed guidance, and only 12,000 postpaid phone net additions – the recent earnings release wasn’t big on good news. Explaining why he still likes the stock, though, David Bahnsen said on CNBC’s “The Exchange”:

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It’s a pure contrarian play. People hate it right now but that’s priced in. That’s what an 8.5 times multiple tells you. We think investors will get paid if they patiently wait through this. It has the cash, the balance sheet, the strategy to go forward.

He’s convinced Verizon can withstand prolonged periods of challenging environment.

Bahnsen likes Verizon stock for the dividend yield

Verizon shares are now down about 20% from their year-to-date high. But Bahnsen dubs them a good pick on a rather lucrative dividend yield of 5.70%. He noted:

The dividend yield is not compromised. Holding the stock, the dividend itself tells you what the long-term direction is. Dividend is the management respecting the shareholder along the way through difficulty.

Telecom is a CAPEX sensitive business and so, Verizon might continue to struggle in the coming months. Over the long-term, however, it will come out a winner, Bahnsen concluded.  

Wall Street currently has a consensus rating of “hold” on VZ.