Sky-high prices and the aggressive federal rate hikes have lately led to heightened stock market volatility. According to the former SEC chief economist Larry Harris, a recession is “pretty likely.” “It’s very hard to stop inflation without a recession,” he added.
On the other hand, with the popularity of hybrid work culture, increased online activities, and advancement in the telecom industry, soaring demand for telecom solutions is imminent.
According to Precedence Research, the telecom services market is projected to grow at a CAGR of 4.9% from 2022 to 2030. Moreover, Swedish telecom giant Telefon AB L.M. Ericsson ADR (ERIC) expects global 5G mobile subscriptions to surpass 1 billion in 2022.
Given this scenario, high dividend-yielding telecom stocks Verizon Communications Inc. (VZ) and AT&T Inc. (T) could be ideal investments to ensure a stable income stream. These stocks are rated Buy in our proprietary POWR Ratings system.
Verizon Communications Inc. (VZ)
VZ and its subsidiaries offer communications, technology, information, and entertainment products and services worldwide to consumers, businesses, and governmental entities. Its segments are Consumer; and Business.
On June 15, 2022, VZ, in partnership with Mastercard and First National Bank of Omaha, launched a value additive credit card for small business owners. This collaboration aims to boost micro-business growth and is expected to bolster the operations of all three firms involved.
VZ has been paying dividends for 21 consecutive years. VZ’s dividend payouts have grown at a 2.1% CAGR in the past five years. Its current dividend translates to a 5.22% yield, while its four-year average yield is 4.40%.
VZ’s total operating revenues came in at $33.55 billion for the first quarter ended March 31, 2022, up 2.1% year-over-year, while its wireless equipment revenues came in at $6.34 billion, up 28.2% year-over-year. Its operating income increased marginally to $7.80 billion. Also, its segment EBITDA came in at $10.48 billion, compared to $10.38 billion in the prior-year period.
VZ’s revenue is expected to increase 2.3% year-over-year to $136.74 billion in 2022. Its EPS is estimated to grow 3.6% per annum for the next five years. The company surpassed EPS estimates in each of the trailing four quarters. VZ has lost 1% over the past month to close the last trading session at $49.03.
VZ’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, equating to a Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Stability. It is ranked #4 out of 21 stocks in the Telecom - Domestic industry. Click here to see the additional ratings for Growth, Value, Momentum, Sentiment, and Quality for VZ.
AT&T Inc. (T)
T’s century-old company provides telecommunications, media, and technical services worldwide. Its segments are Communications; and Latin America. More than 100 million families in the U.S. are registered with T.
On April 21, 2022, John Stankey, T’s CEO, said, “AT&T has entered a new era, meeting this opportunistic moment from a position of flexibility and strength thanks to our evolving networks, enhanced customer experience, growing 5G and fiber customer base and a much stronger balance sheet. And we continue to make good consistent progress on our journey to becoming America’s best broadband provider.”
T has been paying dividends for 37 consecutive years. Its current dividend translates to a 7.51% yield, while its four-year average yield is 6.86%.
For the first quarter ended March 31, 2022, T’s equipment operating revenues increased 5.1% year-over-year to $5.71 billion. Its total mobility subscribers came in at 197 million, up 5.6% year-over-year. In addition, its net cash provided by financing activities came in at $24.25 billion, up 31.2% year-over-year, while its cash and cash equivalents came in at $38.65 billion, up 238.2% year-over-year.
T surpassed EPS estimates in each of the trailing four quarters. Over the past three months, the stock has gained 10.5% to close the last trading session at $19.38.
It’s no surprise that T has an overall B rating, equating to a Buy in our proprietary POWR Ratings system. The stock is ranked #5 in the Telecom - Domestic industry. Click here to see more of T's component grades.
VZ shares were trading at $50.90 per share on Tuesday afternoon, up $1.87 (+3.81%). Year-to-date, VZ has gained 0.35%, versus a -20.51% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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