Telecom shares earn a portfolio spot.
While the move to mobile is old news and the broader internet revolution is even older, it’s important to note that the durability of these trends make them still worthy of your investment money. Sure, the largest share of growth may be in the rearview mirror, but in many ways internet access is now a necessity — and is likely not going away. That makes it a solid investment for long-term investors. And when these telecom stocks offer significant income potential, they are even more useful in buy-and-hold portfolios. Here are nine to consider.
BCE (ticker: BCE)
Montreal-based communications player BCE may not be well-known in the United States, but this company has a lot to offer income investors. It is a nearly $40 billion corporation, making it as entrenched as the big American telecoms, with a diversified business that includes internet and television services to customers across Canada. Though revenue trends show single digit growth rates, remember that long-term investment in telecom stocks is about stability and dividends more than the hope of big-time growth. For income-oriented investors, BCE is a great example of what to look for in a sleepy but stable investment.
Current yield: 5.4 percent
Crown Castle International (CCI)
Structured as a real estate investment trust, or REIT, Crown Castle International is easy to overlook as a communications play. However, the real estate owned by CCI supports 40,000 cellular towers and about 60,000 miles of fiber optic networks that span every major U.S. market. This makes CCI a key player in American telecom. And since it’s structured as a REIT, the stock must deliver 90 percent of taxable income back to shareholders. That makes this a great way to play the future of communications and get a big dividend while you do it.
Current yield: 3.8 percent
Cogent Communications Holdings (CCOI)
Cogent is a $2 billion company providing high-speed internet access to businesses in North America, Europe and Asia. It also offers related services such as web hosting, content and data services. While consumers at home and abroad are seeing a wireless revolution, it’s important to remember businesses need a dedicated wired connection. And since CCOI is smaller and more agile, it can often offer competitive rates and focus on markets with the most potential. That’s why revenue should increase by almost 10 percent in fiscal 2018 despite top-line challenges for some of the bigger players.
Current yield: 3.7 percent
Qualcomm (QCOM)
A much larger company with an even more impressive dividend is Qualcomm. This Silicon Valley technology giant has gotten a bad rap in recent years for relying on the power of its existing patents and products, and failing to innovate. However, as dividend investors know, boring old tech tricks can still be highly lucrative even if they aren’t quite as flashy as they used to be. So while QCOM stock has lagged other tech companies, the dividend is among the best in the sector. And with patents that are used in almost every element of wireless communications, this stock has staying power.
Current yield: 4.2 percent
Verizon Communications (VZ)
One company that shouldn’t be overlooked is Verizon. This corporation commands America’s largest wireless network by subscribers, with more than 150 million customers, as well as a fairly large footprint with its FiOS high speed internet access. Perhaps most interesting, however, is Verizon’s bid for internet properties AOL and Yahoo. These operations have become a unit called Oath that is now one of the largest internet content and advertising networks. This is one more way VZ has ensured it will keep making money off the world’s internet addiction for many years.
Current yield: 4.7 percent
AT&T (T)
Though the No. 2 wireless network behind Verizon, AT&T is no slouch with more than 140 million subscribers on top of a huge legacy landline business. The telecom giant has also made big moves to broaden its already wide footprint, including the $48 billion purchase of satellite television provider DirecTV in 2014 and the recently approved $85 billion bid for Time Warner media properties. While AT&T may not have much to offer in the way of growth, it doesn’t need to get significantly bigger. Income investors come to AT&T for the reliability and dividend.
Current yield: 6.1 percent
China Mobile Limited (CHL)
AT&T and Verizon aren’t the only large corporations in the communications space. China Mobile boasts more than five times the wireless customers of either of those companies thanks to its much larger Asian market. Sure, it’s a bit more expensive to build a massive 21st century network in the remote and rural regions of China, and obviously customers are not quite as well-off as urban Americans. However, the business is not just stable but growing. That fuels dividends for income investors.
Current yield: 4.5 percent
Telefonica SA (TEF)
Telefonica is a Spain-based communications company whose activities include providing wireless to fiber optics connectivity across the European Union. But like China Mobile, TEF is an emerging markets play with a broad Latin America operation. South America has had plenty of troubles in recent years, from a massive economic downturn in Brazil on the heels of a government corruption scandal to continued challenges in Argentina. This has created a bit of a headwind for Telefonica, but the dividend is still robust and reliable over the long term.
Current yield: 5.3 percent
Orange SA (ORAN)
Another worthy European stock is France’s Orange, which pays a similarly attractive dividend like Telefonica but without the troubles of Latin America. Instead, the $45 billion mobile and fixed-line telecom also serves emerging economies in Africa and the Middle East, with a particular focus just across the Mediterranean where there are plenty of French-speaking customers. Although growth metrics are not incredibly impressive, ORAN’s built-in customer base helps ensure strong baseline demand for its services and revenue to fuel dividends.
Current yield: 5.4 percent
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9 Telecom Stocks for Dialed-in Income originally appeared on usnews.com
