Despite solid growth in wireless subscribers, shares of Verizon Communications (VZ -1.15%) fell after the company released another generally mixed report. Nonetheless, the stock is still up more than 30% over the past year, although up just over 10% year to date.

Investors continue to be attracted to this stock due to its strong dividend. The stock currently has A forward dividend yield about 6.5%.

Let’s take a look at Verizon’s third quarter results to see why the stock fell and if now is a good time to buy the stock on a dip.

Strong growth in the number of wireless subscribers

Verizon continues to see strength in its large wireless business, whose revenue grew 2.7% to $19.8 billion. It added 349,000 retail postpaid phone net additions during the quarter, including 239,000 retail postpaid phone net additions.

Broadband also continues to perform well, with total net additions of 389,000. It ended the quarter with 11.9 million total broadband subscribers, up 16% from last year. last year. Most subscriber additions continue to be related to fixed wireless, while 43,000 net Fios subscribers were added.

The end of the Affordable Connectivity Program (ACP), which helped subsidize internet services, continued to be a drag, with prepaid revenue down another $40 million sequentially. However, the company said Excluding Safelink, which handled that program, it added 80,000 prepaid customers, its first quarter of net additions since acquiring TracFone in 2021.

Verizon Business also continued to weigh, with revenue down 2.3% to $7.4 billion. The company continues to lose wireline subscribers in this segment.

At the same time, wireless equipment revenue fell 8.1% to $5.3 billion.

Overall, Verizon’s revenue was flat year over year at $33.3 billion, while its adjusted revenue earnings per share (EPS) fell from $1.21 a year ago to $1.19. Its adjusted EPS beat analyst forecasts by $0.01, while its revenue was just below the consensus of $33.4 billion. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 2.5% to $12.5 billion.

Looking ahead, the company maintained its guidance for the full year. It forecasts full-year wireless revenue growth of between 2% and 3.5%. It expects adjusted EPS to be between $4.50 and $4.70, and adjusted EBITDA to increase between 1% and 3%.

Image source: Getty Images.

The dividend is well covered

As for Verizon’s dividend, it remains well covered and has plenty of room to grow. The company distributed $8.4 billion in dividends during the first nine months of the year, while generating $14.5 billion in free cash flow. This represents a coverage ratio of 1.7x and gives the company plenty of room to continue increasing its dividend.

In the meantime, Verizon’s balance sheet is also in good shape. Its unsecured debt leverage ratio (unsecured net debt/12-month adjusted EBITDA) remained at 2.5.

The company now plans to increase its level of capital expenditure (capital expenditure) next year between 17.5 and 18.5 billion dollars. That will increase from the $17 billion to $17.5 billion the country plans to spend this year. A large part of this sum will be dedicated to developing its broadband business. The company also agreed earlier to acquire Border communications for 20 billion dollars. It will integrate its fiber network into Fios.

Verizon now plans to end 2025 with a leverage ratio on unsecured debt between 2 and 2.25 times.

Is falling prices a buying opportunity?

Even though the stock fell during its earnings report, there was still plenty to like. Verizon continues to experience solid growth in postpaid wireless and broadband services. Meanwhile, it continues to generate a ton of cash, which easily covers its dividend and allows it to reduce debt, make acquisitions like Frontier, and pursue growth opportunities in broadband.

The end of The ACP program will remain a drag until Verizon abandons it, while its traditional wireline business will likely continue to slowly decline. However, with new AI-driven smartphones like the iPhone 16, the company is expected to see a turnaround in its wireless device business in the coming quarters.

In terms of valuation, Verizon is trading just above a forward price/earnings (P/E) ratio of 8.8 based on earnings estimates for 2025, which is slightly lower than the multiple of AT&T. Typically, it trades at a higher price than its rival.

VZ PE ratio (1 year term) data by Y Charts

As such, I think the negative reaction to Verizon’s earnings is overblown. The company still sees its core activities doing well, while benefiting from a solid dividend well covered and which should continue to grow. As such, I would be a buyer of the dip stocks.