Alternatives: Verizon and China Mobile
Just to illustrate what else is out there, let’s take a look at two other solid, dividend-paying telecom stocks. Verizon Communications Inc. (NYSE:VZ) is one of the most widely held stocks in the market and is the most logical alternative to AT&T. Although Verizon has pulled back from its peak, its gains so far this year have been even greater than AT&T Inc. (NYSE:T)’s, and Verizon was a slightly lower dividend player to begin with. Verizon Communications Inc. (NYSE:VZ) pays 4.12% annually, which makes a significant difference from AT&T. Having said that, Verizon Communications Inc. (NYSE:VZ) may have more growth potential over the long run, as it has not capitalized on either its prepaid business or TV offerings as much as AT&T Inc. (NYSE:T) has.
China Mobile Ltd. (ADR) (NYSE:CHL) is actually the largest company mentioned here, and can be thought of as the AT&T of China. The largest mobile phone operator in the world with 703 million subscribers, China Mobile Ltd. (ADR) (NYSE:CHL) has some room for growth, but is pretty mature as a business. The main growth opportunity that I see is that the company is the only one of the three largest Chinese mobile phone companies that doesn’t offer Apple’s iPhone. If this were to happen, China Mobile Ltd. (ADR) (NYSE:CHL) would certainly pick up some new customers. Currently, the company is trading well below its peak and pays a 4.18% yield, but I would be hesitant to jump into this one unless it were to drop a little further in price. Among other things, the state-controlled nature of the company creates an added risk for U.S. investors, and should warrant additional compensation.
Last words
Stocks like these (high-yielding big companies) are bought for steady appreciation over a long period of time. With that in mind, know that you aren’t going to become rich overnight, but start paying attention to how yields of your favorite stocks fluctuate as the market moves. It won’t make you rich now, but making an effort to better time your dividend investments can make a big difference later on down the road. Of the three, I like AT&T Inc. (NYSE:T) the best for its excellent yield, which should continue to increase in coming years, and for their growing TV and prepaid operations.
The article In This Telecom, Yield Is Everything! originally appeared on Fool.com and is written by Matthew Frankel.
Matthew Frankel has no position in any stocks mentioned. The Motley Fool owns shares of China Mobile Ltd. (ADR) (NYSE:CHL). Matthew is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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