Today, we report on a leading telecom that has consistently been one of the best dividend stocks in the U.S. We examine the aggressive moves it makes to compete in an increasingly crowded field, and especially the impact of two major acquisitions.

In the past few years, Verizon has aggressively expanded its wireless and high-speed Internet network. That has attracted new users and helped offset falling revenue from traditional phones.

But new challengers continue to emerge, like low-cost wireless service from Google and video-streaming services like Netflix, which threaten its fibre optic TV offerings.

In response, Verizon is buying up companies that should help it compete— and keep raising its dividend.

VERIZON COMMUNICATIONS INC. (New York symbol VZ; www.verizon.com) gets 70% of its revenue and 95% of earnings from its 108.6 million wireless subscribers. The other 30% of revenue and 5% of earnings comes from its wireline business, which serves 19.5 million traditional phone customers and 26.4 million high-speed Internet and digital TV users.

In 2014, the company bought the 45% of the Verizon Wireless joint venture it didn’t already own from U.K.-based Vodafone Group (Nasdaq symbol VOD). Verizon Wireless sells wireless services in the U.S.

Verizon paid $130 billion for Vodafone’s stake, including $58.9 billion in cash. It also issued $61.3 billion worth of common shares to Vodafone shareholders and borrowed most of the remaining $9.8 billion.

The Vodafone stake, along with strong wireless demand, boosted the company’s revenue by 19.3%, from $106.6 billion in 2010 to $127.1 billion in 2014. Earnings fell from $0.90 a share (or a total of $2.5 billion) in 2010 to $0.31 a share (or $875 million) in 2012, mainly due to a $7.2-billion charge related to a change in its pension plan accounting policies. Earnings jumped to $4.00 a share (or $11.5 billion) in 2013 but fell to $2.42 a share (or $9.6 billion) in 2014 as the Verizon Wireless purchase added more one-time charges and other operating costs.

Excluding all unusual items, earnings per share gained 18.0%, from $2.84 in 2013 to $3.35 in 2014.

U.S. stocks and the value of diversity The Toronto stock exchange is much more closely tied to natural resources than the U.S. stock market is to any particular sector.  When commodity prices are down, other sectors in the Canadian economy can be knocked down with them.  That’s why diversity is so important. You can tap into U.S. stocks that earn a large portion of their revenues in countries around the world. You get the full value and diversity of international markets without the risk of dabbling in foreign stock markets. Learn more

Best dividend stocks: Selling off traditional phone business in three big states helps free up cash

In June 2015, Verizon completed its $4.4-billion purchase of AOL Inc. (New York symbol AOL), which owns several popular websites, including The Huffington Post, TechCrunch and Engadget. AOL has also developed technology that uses analytics software to place ads on websites, helping advertisers better connect with potential customers. Verizon will use AOL’s sites to offer more video, particularly on mobile devices.

The new operations are profitable, and should add $2.6 billion to Verizon’s annual revenue. Verizon can comfortably afford this purchase. As of March 31, 2015, it held cash of $4.4 billion, or $1.08 a share. Its long-term debt of $108.9 billion is a high, but manageable, 57% of its market cap.

Meantime, the company continues to free up cash by selling less important operations. For example, it recently agreed to sell its traditional phone business in California, Florida and Texas for $10.5 billion. It has also leased the rights to 11,300 transmission towers for $5 billion.

Including AOL, Verizon’s 2015 earnings should rise to $3.84 a share, and the stock trades at a low 12.2 times that forecast. The $2.20 dividend yields 4.7%.

Recommendation in Wall Street Stock Forecaster: BUY.