AT&T Inc. (T), Verizon Communications Inc. (VZ): Invest in This Telecomm Giant for Yield Without the Market Maturity

Page 1 of 2

AT&T Inc.Usually when thinking of telecommunications companies, AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ) are the first firms to come to mind. Sure, there’s also  MetroPCS Communications Inc (NYSE:PCS) and Sprint Nextel Corporation (NYSE:S) , but AT&T and Verizon are the dominant duopoly in the business. When I think of telecoms, I also think yield. In a yield starved environment, AT&T and Verizon, offering yields of around 5.1% and 4.6% respectively, can provide investors with a source of generating income. Metro and Sprint- not so much. Neither of the aforementioned offers a dividend payout. Sprint looks more like a spec play at this point, and MetroPCS Communications Inc (NYSE:PCS) without yield isn’t offering much in the income-generation category. AT&T and Verizon are also starting to look pricey, with both trading near their 52-week highs. Investors, however, also have another option to fill the telecom void in their portfolio if they look abroad for alternatives.

Not too hot, not too cold…

China Mobile Ltd. (ADR) (NYSE:CHL) may be the telecommunications firm to save the day. The firm may not be too hot as far as yield goes (its dividend yield of around 3.4% is inferior to the yields of the U.S. duopoly of AT&T and Verizon), but it isn’t as cold as Sprint or PCS either- and seems to be in far better shape financially than all four mentioned American firms when comparing debt to equity ratios. Not to mention that the Chinese carrier is also the world’s largest carrier by subscribers. China Mobile is also attractively valued, being priced at around only 11 times earnings- a discount to its large U.S. counterparts AT&T Inc. (NYSE:T) and Verizon (the smaller Metro PCS currently trades at a P/E of around 8, with a forward P/E of around 13. Sprint is currently plagued by negative earnings per share, and thus has no P/E ratio). We are looking at a company with over $200 billion in market cap here, so they are definitely a force to be reckoned with, and also have the growing Chinese consumer base on their side.

But wait a minute…they don’t have the iPhone?

You would think not having the iphone would be an issue for consumers, but apparently not. China Mobile Ltd. (ADR) (NYSE:CHL) recently reported its best-ever monthly 3G uptake numbers, “adding 5.5 million net 3G subscribers in December as against an average of about 3 million in the previous months,” according to Forbes. This comes at a time when the iphone 5 was released on two competing carriers who saw only around 3 million new subscribers each.  Apple Inc. (NASDAQ:AAPL) needs China and emerging markets for future growth, and is still doing well on other carriers such as China Unicom (Hong Kong) Limited (ADR) (NYSE:CHU) and China Telecom Corporation Limited (ADR) (NYSE:CHA), but ceding smartphone sales to Nokia Corporation (ADR) (NYSE:NOK) and Android to the world’s largest carrier isn’t something to be thrilled about. While Apple may eventually work out a deal with the company, China Mobile seems to hold the upper hand.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!