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Verizon Communications Inc. (NYSE: VZ) has been one of the worst performing of the 30 components of the Dow Jones industrial average this year. While the Dow is up 10.25% to 25,717.74, even after a sell-off of almost 800 points, Verizon is down by 1.78% over that time to $55.22. However, the nature of its businesses, its rock-solid balance sheet and a yield of over almost 4.4% makes Verizon an ideal holding if the markets crater.

Verizon is largely insulated from a trade war. Almost all of its $131 billion in 2018 revenue came from the United States. Even in a trade war, that and its $31 billion in operating income are a natural buffer.

Verizon is also in businesses usually deemed recession-proof. Its wireless business is supported by 156 million customers, which puts it barely behind AT&T’s 160 million. A slowing economy is unlikely to affect demand for wireless service. People may buy less expensive phones. Since Verizon subsidizes the cost of some of those, the results of upgrades to cheaper products do not necessarily hurt it. Wireless is also about to go through one of the largest upgrade cycles in its history. The superfast wireless broadband 5G network will replace much slower 4G service. Most Americans will go through the upgrade cycle within two or three years. This alone guarantees Verizon revenue continuity.

Verizon’s second large business is fixed wire broadband to the home. In its case, the system operates via fiber, which powers the company’s Fios network. Broadband to the home is nearly universal in the United States. Although there is cable competition, churn rates of wireline service are low. Verizon’s churn rate is only slightly over 1% per quarter. As customers of other services churn, some come to Verizon. As is true with wireless, home-based broadband is one of the few service consumers view as absolutely essential.

Verizon’s third business is connectivity for business. This is primarily as a provider of wireless and wireless broadband wireline service. As is true with most consumers, a business cannot do without these. Churn, again, is a challenge, but, as with consumers, it is low.

Verizon does have a media business. An economic slowdown can hurt media industry revenue, but the media operations of Verizon are small compared to the rest of the company. These media assets include Yahoo, TechCrunch and HuffPost. Yahoo, in particular, is large enough so that it is an important medium to many advertisers.

Verizon stock will not sell off as much as many other large company shares if there is a sharp market or economic downturn. In fact, it may not go down at all, if there is a rapid “flight to safety” and investors need a safe harbor.

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