While many of the top brokerage firms we cover are basically neutral on the fourth-quarter prospects for the major carriers, many remain quite positive on the possibilities for the regional local exchange carriers, or RLECs. In fact, in a new report from analysts at UBS they actually expect capital expenditures (capex) for the fourth quarter and next year to increase at the three major companies. Increasing capex is rarely a sign of an industry slowdown. To the contrary, it is usually the first thing that gets cut when business slows down, so a pick-up is a very positive sign.

The UBS team feels that spending in the last part of this year at the RLECs appears to be focused on network upgrades, including deploying fiber-to-the-home infrastructure. That kind of spending also helps increase customer choice and spending. With the increased good news at these companies, we focused on the three stocks that pay the highest dividends. At this point, these dividends look to remain in place for shareholders.

CenturyLink Inc. (NYSE: CTL) is the largest of the RLECs and is expected to get a large dose of government money to provide continuing Internet service in rural areas. Analysts believe the company is expected to get the largest chunk of the money at $497 million. This compares to $350 million in frozen support they received in 2013. The company is one of the largest telecommunications firms in the United States and a global leader in cloud infrastructure and hosted IT solutions for enterprise customers. Many on Wall Street continue to believe that a real estate investment trust (REIT) spin-off of some assets could be in the cards.

CenturyLink investors are paid an outstanding 5.5% dividend, which looks to be sustainable. The Thomson/First Call consensus price target for the stock is $38.90. CenturyLink closed Monday above that figure at $39.84.

READ ALSO: New Cancer Detection Technique Has Enormous Potential for Life Science Stocks

Frontier Communications Corp. (NASDAQ: FTR) is designated to get a large chunk of government money this year and beyond to provide rural Internet service. Frontier stands to receive $303 million from the government, should it choose to continue to participate. They received support of $150 million in 2013. The company offers broadband, voice, satellite video, wireless Internet data access, data security solutions, bundled offerings, specialized bundles for residential customers, small businesses and home offices and advanced communications for medium and large businesses in 27 states.

Frontier investors receive a sizable 6.2% dividend. The consensus price target is $6.22, but Frontier closed trading on Monday at $6.50.

Windstream Holdings Inc. (NYSE: WIN) reported its plans back in the summer to spin off its fiber and copper network, and its real estate assets (excluding data centers, equipment) into a publicly traded REIT, pending regulatory approval. The company has since received an approval letter from the IRS for the change. For the other top RLECs, the transformation of some assets to REIT status makes tremendous sense from a taxation standpoint, and many on Wall Street feel if the Windstream transition is well received others may be right behind in the transformation.

Windstream investors receive a gigantic 10.5% dividend. The company reported solid third-quarter earnings and looks poised to continue to pay the dividend to shareholders. The consensus price target is $10.33, and shares closed most recently at $9.45.

ALSO READ: J.P. Morgan Says Top Energy Stocks May Have Bottomed, Even If Oil Has Not

With the interest rate scenario still very benign in terms or rising rates, these companies should continue to pay shareholders on a regular basis. With growth solid, and spending also good, investors should feel comfortable about adding these stocks to growth and income portfolios.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.