The top dividend-paying telecommunication stocks had a very solid first quarter, due in part to the fact that the first six weeks of the quarter were a nightmare as the market was hit extremely hard. Like utility stocks, many investors rush to telecom companies in times of market duress as they are perceived as much safer with less volatility. With big gains in the bag, some on Wall Street are turning bearish on the sector.
One of those we cover that is less than thrilled with the overall sector is UBS. The firm has the sector rated at Underweight, as it and others see many of the stocks vulnerable in a rising rate environment. UBS also notes that the rise in the sector lifted multiples, which are traditional fairly low. UBS does have four stocks on the list that are the equity preference or bellwether members. Here we cover the three that pay large dividends.
This company had an outstanding first quarter from a stock price standpoint and could be poised to go higher. AT&T Inc. (NYSE: T) is the world’s largest provider of pay TV, with TV customers in the United States and 11 Latin American countries. In the United States, the AT&T wireless network has the nation’s self-described strongest 4G LTE signal and most reliable 4G LTE. The company also helps businesses worldwide serve their customers better with mobility and highly secure cloud solutions.
With its shares trading at a very cheap 12.5 times estimated 2016 earnings, the company continues to expand its user base, and strong product introductions from smartphone vendors have not only driven traffic but increased device financing plans.
AT&T has been focusing on the IP VPN and Ethernet services. This outstanding business model, along with the decline of Verizon’s market share in the arena, has helped the company meaningfully grow its revenues from strategic business services. Apart from taking appropriate technical measures, the company has collaborated with big cloud service providers like Amazon Web Service and data center operators to provide Ethernet connections.
The company reported adjusted first-quarter earnings of $0.72 per share on revenue of $40.5 billion back in April. Its revenue rose 24% from the year-earlier period primarily due to the July 2015 acquisition of DirecTV for $49 billion in equity value. The company added 2.3 million wireless subscribers during the first quarter. About 328,000 of the additions were DirecTV net adds. The company’s Entertainment Group broadband grew with 186,000 IP broadband net adds.
AT&T investors are paid a huge 4.88% dividend. The Thomson/First Call consensus price estimate is listed at $39.55. The stock closed most recently at $39.31 per share.