Verizon: An Undervalued Dividend Stock or a High-Yield Trap?

Verizon Communications (NYSE: VZ) is often considered a reliable income stock. It's one of the largest telecom companies in America, and it's raised its dividend for 18 consecutive years. But over the past five years, its stock price declined nearly 30% as the S&P 500 advanced more than 90%.

Verizon's stock stumbled as it struggled to gain new wireless subscribers. But at $42 a share, it looks undeniably cheap at 9 times forward earnings and pays a hefty forward yield of 6.5%. Do that low valuation and high yield make Verizon an undervalued dividend play? Or is it a high-yield trap that will erase its own dividend gains with its declining stock price? Let's see if we can find some answers.

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