The best telecom stocks rise to the top in one of the most competitive industries. Finding and investing in them can be key to supporting your portfolio.
Telecom companies tend to be very stable and provide consistent dividend payments. This makes them ideal for investors looking for a reliable income stream.
Telecom companies often have strong customer relationships, which can provide a competitive edge in the market. They also are typically well-regulated, guaranteeing investors that their investment is safe.
Given all of these factors, it is no wonder that the best telecom stocks are often some of the most sought-after investments on the market.
Here are some telecom stocks that investors should consider investing in to stay ahead:
AT&T (NYSE:T) is one of the largest telecom providers in the world. The company offers a wide range of services, including wireless, broadband, and television.
AT&T has a strong financial position, with more than $168.9 billion in annual revenue and an adjusted net income of over $32.8 billion in fiscal 2021. The company also has a dividend yield of over 7%, making it an attractive option for income investors.
The year thus far has been an eventful one for AT&T. The telecom giant shed its WarnerMedia entertainment assets and streamlined its operations. Now, it is focusing on its 5G assets, and the strategy is paying off.
In its recent financial report, AT&T reported that its revenues increased by 5.2% in the second quarter to $29.6 billion. AT&T recorded 813,000 postpaid phone subscriber net adds for the quarter, the best number in a decade.
The company upped guidance to a range of 4% to 5%. However, we’re seeing heavier spending by the company, resulting in expected lower free cash flow this year. It will be at around 14 billion, down from $16 billion earlier.
However, the company has more than enough cash to maintain its healthy dividend policy. Until last year, the company was a Dividend Aristocrat, an elite group of S&P 500 companies that has consistently hiked dividends for at least 25 consecutive years.
AT&T is looking more and more like a great investment now that it has sorted its issues. If you are looking to load up your portfolio with the best telecom stocks, AT&T is a great option.
Verizon (NYSE:VZ) is another large telecom company with more than $163 billion in market capitalization. The company offers similar services to AT&T, including wireless, broadband, and television.
Verizon also has a strong financial position, with over $133.6 billion in annual revenue last year. The company’s dividend yield is 6.71%, making it another attractive option for income investors.
Verizon operates a non-complex business model compared to its competitors. Although much like AT&T, the company made a foray into entertainment by purchasing Yahoo and AOL, it was nothing compared to AT&T’s acquisitions. Plus, it sold those businesses last year.
Verizon’s biggest issue is a sluggish economic environment this year, affecting top-line growth. Since the company operates in a mature, saturated industry, you cannot expect exponential growth.
Verizon’s adjusted earnings per share rose 10% in 2021 as consumers purchased new 5G devices. This was one of the best growth rates the company came up with in recent years.
However, the company’s forecast for this year is not positive. It expects a 3% to 5% drop in EPS due to inflationary pressures and stiffer competition from other wireless providers.
In the long run, Verizon is a quality stock that has kept a laser focus on its 5G ambitions through the years. The company has raised its dividend for 15 consecutive years, and thus ensured shareholders’ stability. A consistent business model and income make VZ one of the best telecom stocks.
T-Mobile (NASDAQ:TMUS) is the second-largest wireless carrier in the United States. The company offers wireless services to customers and has been aggressively expanding its network in recent years. T-Mobile also has a strong financial position; the telecom giant is guiding for $7.3 billion to $7.6 billion in free cash flow this year.
The merger with Sprint dominated headlines in recent quarters. However, now that the dust has settled, T-Mobile and its investors are enjoying the benefits.
T-Mobile and Sprint say that by merging their billing operations and IT departments, they’ll be able to consolidate and optimize operational costs. It will result in $6 billion in savings. It also combines wireless networks, cellphone towers, and retail locations, creating a very powerful wireless carrier.
However, T-Mobile is not slowing down. Now that the merger is in the books, it focuses on adding postpaid subscribers. The merger is in the books, so now, what is T-Mobile’s priority? Add more postpaid subscribers.
For 2022, the forecast is for 6 million to 6.3 million postpaid lines, aggressive targets in a year when most companies are holding back.
In conclusion, T-Mobile has been on a roll lately. Since the merger with Sprint, T-Mobile has been expanding its network and offering more and more perks to its customers. All of these factors place it among the best telecom stocks to buy.
On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.