The telecommunications industry continues to enjoy massive growth and increased market activity highlighted by such major developments as Singtel acquiring Trustwave for $810 million.
But while we are experiencing prosperity at the moment, there will always be a need to become wary of the implications of investing on telecom stocks.
Guarantees for hefty dividend yields are almost always nonexistent as telecom companies abruptly slash dividends faster than you can say “dividend reinvestment plan.”
With this kind of uncertainty, one cannot risk getting too cocky about having full faith in the growth of a telecom company’s dividends. Wiser decisions are needed when it comes to choosing stocks that are sure to deliver high yields.
In his article for Investopedia.com, business writer Dan Moskowitz has listed the five hottest telecom stocks and the five most promising speculative stocks for the year.
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Verizon is the leading 4G LTE network in the United States. It’s also the highest quality network available. An increased demand for data and devices are positives, but lower prices due to competition are a negative. Nevertheless, buying out Vodafone’s 45% stake in Verizon Wireless aids free cash flow, which then helps maintain the generous dividend.
AT&T has to contend with increased competition, especially with no-contract plans. However, thanks to its low monthly fee, subscribers are up and churn is down.
Atlantic Tele-Network isn’t a well-known name, but it sports a stellar balance sheet, and revenue and net income have increased year over year.
Nippon Telegraph and Telephone has managed to stay afloat on the top line while delivering bottom-line growth despite being trapped in Japan’s deflationary economy.
BCE is the largest telecommunications company in Canada, and Canada isn’t going anywhere. BCE is attempting to grow organically and inorganically. The latter is important due to increased competition.
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CenturyLink has massive exposure to the rural U.S. market. The concern is that landline phones are on the decline, and the company cut its dividend back in 2013. On the other hand, fiber-optic TV is enjoying growth, and not many investors are going to complain about a 5.5% annual dividend yield.
Rogers Communications is another Canada play. It’s has also taken a slight hit due to competition, but it’s still performing well. And that 4.2% yield is certainly appealing.
Vodafone received a generous $130 billion for the sale of its stake in Verizon Wireless. This is obviously going to help maintain the dividend. Vodafone operates in 30 countries, and it recently spent $10 billion to purchase Ono — a Spanish cable operator. This added approximately 2 million new customers. The risk is the Spanish economy; Spain’s unemployment rate is 24%. It’s even worse for Spanish youths. Therefore, growth in that market might be difficult to come by.
Telecom Argentina S.A. and Orange are foreign companies that make this list thanks to solid dividends to go along with stellar balance sheets.
One main factor why these Telecom companies soared up high is having a effective and successful B2B marketing campaign. Here’s how to generate steady flow of telecom leads.
Source: Top 10 Telecom Stocks for 2015