Verizon Communications Inc. (VZ), AT&T Inc. (T), Sprint Nextel Corporation (S): Should You Put Telecom Stocks on Hold?

Dialing in On a Dime

So why is this significant? Telecom stocks should interest investors who seek passive income. These companies are advantageous in the current market due to their large regular and reliable payouts. The ability to earn dividend income going forward is critical to both maximize returns as well as hedge inflation. In the end, telecoms make sense in your portfolio if you seek stability while enjoying high yield and potential capital appreciation.

Making a Call on Telecoms

As stated earlier, the telecom industry is intensively competitive. As with any stock, predicting the future is difficult, if not impossible. In terms of telecoms, they behave much like bonds: a nice coupon with the potential uptick and little else. In general, I try to avoid the telecom sector, but if you wanted to invest there, you might go with AT&T Inc. (NYSE:T). I think there’s just more to like and a more compelling argument to be made for the stock. And although customers in general have been less satisfied with quality of service (QoS) issues, expect most of these to be resolved going forward as the company continues wireless network expansion.

In sum, despite AT&T Inc. (NYSE:T)’s current competitive wireless disadvantage to Verizon Communications Inc. (NYSE:VZ) anticipate this issue to be aggressively addressed by corporate management. Regarding Sprint Nextel Corporation (NYSE:S)’s run, I think it’s largely over. Although a turnaround is always possible, don’t hold your breath. In the end, as sector improvement continues, new telecom investment opportunities will become more attractive. In the meantime, investors should do their due diligence and juxtapose telecom with more lucrative investments.

The article Should You Put Telecom Stocks on Hold? originally appeared on Fool.com and is written by David Mercer.

David Mercer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. David 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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