Fifth-generation (5G) wireless is here and has quickly become the dominant network on which the world’s electronic devices run, from smartphones to tablets and laptop computers. According to Contrive Datum Insights, which covers the industry, the global 5G market is expected to grow at a compound annual growth rate of nearly 50% and reach nearly $200 billion by 2030. Companies around the world are racing to upgrade their consumer electronic devices so that they run on 5G networks at the same time that other companies are enhancing the infrastructure needed to power those networks. It all adds up to a red-hot-growth market for investors to take advantage of. Here are three 5G stocks to buy for the future of connectivity.
| QCOM | Qualcomm | $131 |
| AMT | American Tower | $217 |
| AVGO | Broadcom | $599 |
5G Stocks to Buy: Qualcomm (QCOM)
Based in San Diego, Qualcomm (NASDAQ:QCOM) makes the semiconductors and software that are critical to 5G networks and the mobile phones that run on them. The company forms a major part of America’s wireless backbone. And its technology has never been more in demand than now. That helps to explain why QCOM stock is up over 20% so far in 2023.
But even with this year’s sharp increase, QCOM stock still has a moderate price-earnings ratio of 12.5, which is low for a tech company of Qualcomm’s size. And the stock pays a quarterly dividend yield of 2.3%, which is high for a tech stock.
Qualcomm is facing a cyclical slowdown right now in mobile-phone sales, and it continues to grapple with supply-chain constraints. As a result, the company reported disappointing earnings recently, with its revenue falling 12% year-over-year to $9.46 billion, and its net income declining 27% to $2.68 billion or $2.37 per share. But over the long term, QCOM stock will remain a reliable winner and one of the best ways for investors to play the 5G boom.
American Tower (AMT)
Speaking of companies whose infrastructure is critical to 5G networks, how about Boston-based American Tower (NYSE:AMT)? A real estate investment trust (REIT), American Tower owns and operates the towers on which 5G signals are broadcast, not only in the U.S. but all over the world, from Latin America to Europe and Asia. Currently, the company owns and operates more than 200,000 communications sites globally, including more than 40,000 towers and sites in the U.S. and neighboring Canada.
AMT stock has performed well over the past few years and has a track record of consistently generating higher returns than the market.
This year, the stock is up 2.6%, and it is down 7% over the past year. The stock is a little pricey with a P/E ratio of 34.4, but it does offer shareholders a chunky quarterly dividend yield of 2.7%. In fact, American Tower has raised its dividend for 44 straight quarters, increasing the quarterly payout by 643% over an 11-year period.
Broadcom (AVGO)
Another semiconductor and microchip company whose products are important components of broadband and wireless networks is California-based Broadcom (NASDAQ:AVGO). A going concern since 1961, Broadcom tends to get less attention in the business press than some newer semiconductor companies. However, AVGO has performed well over the long term for shareholders who have stuck with the company.
In 2023, AVGO stock is up 7%. The stock has gained 16% over the past 12-months, when many of its peers’ share prices fell more than 30%.
Like the other names on this list, Broadcom has a high quarterly dividend yield, as its yield is now 3.10%. Its P/E ratio looks decent at 22.8, indicating that Broadcom’s stock is not overvalued at its current levels.
AVGO stock did retreat recently on reports that Apple (NASDAQ:AAPL) plans to stop using its chips in favor of its own semiconductors and microchips. But not to worry; Broadcom will adapt and be just fine over the long haul.
On the date of publication, Joel Baglole held a long position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
