High-Yielding Telecom Stocks: A Tale of Two Giants
The current market landscape has created a unique opportunity for investors seeking high returns. Amidst the uncertainty, two telecom giants, AT&T (NYSE: T) and Verizon Communications (NYSE: VZ), stand out as attractive options. Both companies have demonstrated resilience and are poised for solid single-digit growth. As interest rates decline, these high-yielding dividend stocks could become increasingly popular.
AT&T: A Turnaround Story
AT&T has undergone a significant transformation, shifting its focus from the competitive entertainment business to its core telecom operations. The sale of its stake in DirecTV for $7.6 billion marks a crucial step in this journey. This strategic move has pleased dividend investors, who appreciate the added stability it brings to the company’s operations. AT&T’s fiber business has shown impressive growth, with 226,000 net additions in its most recent quarter, marking the 19th consecutive quarter above 200,000. The company expects to reach 30 million fiber locations by the end of next year and projects 3% growth in wireless service revenue.
Verizon: A Hidden Gem
Verizon’s stock has lagged behind AT&T’s this year, but this could be a blessing in disguise. With a yield of 6.6%, Verizon offers an attractive opportunity for income-focused investors. The company’s plan to acquire Frontier Communications for $20 billion could accelerate its growth rate and expand its fiber network. Although the deal is not yet approved and would increase debt, it could pay off in the long run. Verizon has a history of increasing its dividend, with a 23% hike over the past decade. Its forward P/E multiple of under 9 makes it a cheaper buy than AT&T.
The Verdict
Both AT&T and Verizon are compelling options, but Verizon’s valuation, yield, and focus on expanding its fiber business give it an edge. As interest rates decline, Verizon’s debt concerns may dissipate, and its growth prospects could improve. With its attractive yield and potential for upside, Verizon looks like a top dividend stock worth considering.
Leave a Reply