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Telecom Stocks – Best Stocks and Telecom ETFs to Buy Now

Posted on Thursday, November 28th, 2019 by Matthew Sweeney

Telecom Stocks – Best Stocks and Telecom ETFs to Buy Now

Telecom stocks for telecommunication companies are traded on stock exchanges around the world. These stocks offer steady performance, even during market downturns, and many provide investors a dividend or frequent payout of profits the company makes. Here are some of the top telecom stocks to consider.

Telecom Companies

Stocks generally represent an interest in a company, such as ownership or voting rights. Anyone with enough money can invest in a company and buy ownership. If you do not want to buy shares in one single company, you can look into exchange traded funds (ETFs) and invest in many companies at once.

When share prices change, an investor can reap the benefits and trade their shares for a profit. For example, check out these most active stocks or best growth stocks. Some stocks offer dividends that can be used to structure regular income.

There are many factors that can influence stock markets around the world. Political issues, such as trade wars and elections, can influence investing decisions. Disasters caused by famine, disease, severe weather, and more can also impact stock markets. During times when the stock markets are down and prices are dropping, some stocks hold their value—such as telecom companies. These companies often have a subscriber base which allows a steady stream of income year-round.

Telecommunication equipment is also constantly being improved and customers will continue to purchase the newest upgrades to their smartphones, telephones, and internet services. Wireless communication, mobile telecommunications, and global connectivity are expected to show continued growth which may indicate these stocks are a good investment opportunity.

What is Telecommunications?

Telecommunications encompasses the field of using technology to extend the capabilities of communications. Telecommunications or telecom services use a physical medium to transfer data over long distances. This can include wired connectivity using cables and fiber optics or wireless technology, such as radio waves and infrared. Even sound can be used to send information as vibrations through the air. Wireless communications like Wi-Fi, cellular networks, and satellites use radio waves to send information around the world using frequency ranges from Megahertz (MHz) to Gigahertz (GHz).

Behind the scenes is a massive investment by telecom companies to create infrastructure that supports worldwide connectivity. With the explosive growth of personal computing and smartphone usage, the need for mobile connectivity has increased dramatically over the past few years.

Currently, the industry is poised to launch 5G networks that promise to offer faster speeds for cellular customers. The basic premise of a 5G network is to establish more telecommunications services, such as cell towers and routers, in more locations to decrease latency and allow the connection of more devices. Companies in the telecommunications industry offer customers a variety of connectivity solutions, such as Verizon’s FiOS or Fiber Optic Service, which uses light to send data quickly and securely.

As more and more devices require connectivity, telecom companies are uniquely positioned to capitalize on future growth. According to Forbes, the telecommunication industry holds over 3.4 trillion in assets and amassed over 1.5 trillion in revenue over 2018. The top 5 companies listed here total over $889.65 billion in market capitalization.

AT&T has a long history of providing telephone and telecommunication services in the telecom sector. Its roots trace back to Alexander Graham Bell, known for his work on creating the first working telephone. This company has stock available on the New York Stock Exchange (NYSE) under the ticker symbol T. As of November 2019, AT&T had over 7 billion shares outstanding at a price per share of $37.45. This puts the market capitalization or estimate of value near $273.5 billion based on share price.

AT&T is one of the largest companies in the telecommunication industry based on market value. Concerns over monopolies and other issues spawned the need for regulations and rules. The Federal Communications Commission (FCC) and other governing bodies help regulate the telecommunication sector. In a sense, this also provides stability for investors. These regulations are what split AT&T into regional sections in 1980, which were acquired by other companies like Verizon.

AT&T and some other telecom stock companies may offer dividends. When a firm has financial earnings from revenue left after expenses and taxes, they can opt to pass some of that free cash flow to investors in the form of a dividend—usually expressed as a per share value. Having a dividend investing strategy can be a good way to structure profit as periodic income.

Verizon is another major player in the telecommunication industry and services sector. Verizon trades shares on the New York Stock Exchange under the ticker symbol VZ. Currently, the company has over 4 billion shares outstanding. When these shares have a price of almost $60, the market capitalization is over $246 billion.

After the breakup and regulation of telecom companies, Verizon emerged and evolved as a major player. This company is following closely behind AT&T for market share and is poised to take advantage of the upcoming 5G rollout. Telecommunications service providers, like Verizon, provide subscribers with long-distance calling, mobile data, and global connectivity. Verizon offers many different products, including cloud-based storage, business software, and applications that are stored on the cloud, known as Software-as-a-Service (SaaS). Verizon’s popular fiber optic service is the reason some investors choose this fiber optic stock.

T-Mobile is another telecom company to watch closely. While T-Mobile does not compete on the same level as AT&T and Verizon, this company is likely merging with Sprint to become more competitive. T-Mobile stock trades on the NASDAQ or National Association of Securities Dealers Automated Quotations under ticker symbol TMUS. The NYSE and NASDAQ are both stock exchanges but they function differently. NASDAQ is a dealer market while the NYSE operates as an auction. Certain stocks also tend to trade on one or the other.

T-Mobile currently has a price per share of $77.74, which is higher than both the AT&T and Verizon prices. The company only has 856 million shares outstanding for a market cap of $66.51 billion, which is not even half of Verizon’s market cap. Still, this company is also poised to take advantage of the 5G rollout paired with the Sprint merger that the U.S. Justice Department approved.

Comcast is a major player in cable television and the entertainment industry. The company has also obtained or funded infrastructure, such as cable systems, to disseminate media. Shares of Comcast trade on NASDAQ under ticker symbol CMCSA. Currently, the company has over 4.5 billion shares outstanding at roughly $44.10 per share. This puts the company’s market capitalization at $201 billion.

Instead of focusing on telecommunication systems, this company has focused more on providing entertainment to cable subscribers by merging or acquiring companies like E! Entertainment, Metro-Goldwyn-Mayer, and NBCUniversal. Comcast also offers services for landline and mobile phones as well as home security.

Diversifying your portfolio by investing in complementary technology stocks can help lower the volatility of your earnings. Comcast and Charter focus heavily on entertainment while utilizing telecommunications technology—which may make them great stocks to buy.

Charter Communications, Inc. is a cable services provider in the U.S. The company offers subscription-based services, such as video on demand, HD television, pay-per-view, and more. Trading on NASDAQ with ticker symbol CHTR, Charter sits at a price per share of $478. With 215 million shares outstanding this brings a market capitalization over $102 billion. Charter and Comcast offer similar services by providing access to entertainment, WiFi, and security suites. Charter also works with data networking, fiber optics, business telephone systems, web hosting, and more.

Top Telecom ETFs

Investing in any of these companies can reap many benefits, such as possible dividends and growth over time. Another option is to invest in many different tech companies through an exchange traded fund (ETF). These funds include securities from many different companies in related industries. This mitigates the risk of any one company failing drastically and taking your investment with them. The lowered risk or volatility is what makes these great stocks to buy. Here are some of the top ETFs for telecom stocks:

  • Vanguard Communication Services ETF
  • Fidelity MSCI Communication Services Index ETF
  • iShares U.S. Telecommunications ETF
  • iShares Global Telecom ETF
  • FirstTrust Index NextG ETF

Vanguard Communication Service ETF (VOX) has a price per share of $91 and a market capitalization over $2 billion. It is important to note that these telecom ETFs hold more than just telecom stocks. For example, Vanguard ETF holds mostly media and entertainment companies and only 19% of the ETF is telecom services.

Both the Vanguard ETF and Fidelity MSCI Communication Services Index ETF trade on the NYSEARCA or the NYSE Arca abbreviation of Archipelago Exchange. The Fidelity ETF trades under ticker FCOM at $34.69 per share and a market cap of $467 million. Similar to Vanguard, this ETF invests mostly in media and entertainment with only 18% for telecom services.

iShares U.S. trades on the BATS or Better Alternative Trading System at $29.41. In contrast, iShares Global Telecom ETF trades on the NYSEARCA under ticker IXP at $60 per share and a market cap of $233 million.

FirstTrust Index NextG ETF trades on the NYSEARCA under ticker NXTG at $53 per share. This ETF has a market cap of $232 million and invests mostly in semiconductors and equipment, followed by technology hardware and equipment. Only 17% of the ETF trades in telecom services.

Should I Invest in Telecom Stocks?

Before deciding to invest, ensure you have the most up to date information by using a trusted source such as Marketbeat. You can also find company insights and other key factors like dividend payouts and past performance metrics.

Market sentiment favors telecom stocks for their growth and potential dividends from cash flow, as well as lower perceived volatility. Demand for telecommunications and wireless networking continues to grow as devices connect to the internet through internet service providers (ISPs). The Internet of Things (IoT) and connected devices, such as smart refrigerators, smart cars, sensors, and more require global internet access, making telecom stocks some of the biggest stock gainers. Between the expected growth and regulation of the telecom industry, these stocks offer a less risky option for investors.

Companies Mentioned in This Article

CompanyCurrent PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
AT&T (T)$38.26flat5.33%10.87Hold$39.22
Verizon Communications (VZ)$60.81flat4.05%12.91Hold$63.13
T-Mobile Us (TMUS)$75.47flatN/A22.46Buy$92.42
Comcast (CMCSA)$43.58flat1.93%17.09Buy$50.52
Charter Communications (CHTR)$475.27flatN/A91.05Buy$458.75
Vanguard Communication Services ETF (VOX)$91.86flat0.88%N/AN/AN/A
First Trust Indxx NextG ETF (NXTG)$54.04flat0.44%N/AN/AN/A

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