In this article we will take a look at the 10 best telecom dividend stocks to buy now.
The telecommunications sector plays a key role in running governments, businesses, and keeping people connected across the world. The COVID-19 pandemic has highlighted the importance of the telecom sector not only in the global economy but also the everyday life of an average individual. According to the International Telecommunication Union, there were more than 4 billion with access to the internet last year, most of whom were in developing countries. However, the number represents less than half of the world population and efforts are being made to improve access to telecommunications in underprivileged societies.
Since the use of communication devices is such a widespread phenomenon, telecommunications is a trillion dollar industry. The global telecom services industry was estimated to be worth more than $1.6 trillion in 2020. The industry was growing at a compound annual rate of around 6% and was expected to reach a size of more than $3 trillion within two years. The importance of digital services in the sector is also growing. According to Netherlands-based accounting firm KPMG, more than 79% of the CEOs in the sector are of the view that the pandemic has accelerated that process by years.
Telecom companies have been around since the first telephone was invented more than a hundred years ago. With steady growth over the years, they have come to be recognized as household names around the world. As established businesses, they trade publicly on the stock market and have stable revenues. This allows these companies to pay dividends to their shareholders on a regular basis. These telecom firms often have high dividend yields, in excess of 4%, and pay them in semi-annual or annual cycles.
Some of the big names in the industry include AT&T Inc. (NYSE: T), Verizon Communications Inc. (NYSE: VZ), T-Mobile US, Inc. (NASDAQ: TMUS), Vodafone Group PLC (NASDAQ: VOD), and America Movil SAB de CV (NYSE: AMX). The factors influencing the growth of telecom dividends include investment in fixed capital, indebtedness, price to book value ratio, free cash flow (FCF), and liquidity. These companies also pay dividends regardless of economic cycles, making them appealing as dividend stocks.
The same, however, cannot be said of the hedge fund industry. Even as telecom stocks deliver stable dividends in volatile markets for someone looking to make a healthy income on the side, hedge funds are being clobbered with the rise of digital media and stock rallies cheered on by the internet. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
With this context in mind, here is our list of 10 best telecom dividend stocks.
Best Telecom Dividend Stocks to Buy Now
10. Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (NYSE: TLK)
Dividend Yield: 3.5%
Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk (NYSE: TLK) is a Jakarta-based telecommunications firm. The firm has interests in fixed line telephony, internet, and data communications. It has a market cap of more than $22 billion and posted more than $9.7 billion in revenue in December 2019. The firm has a four-year average dividend yield of more than 4.09% and the average yield has stayed above 4% for eight of the last ten years. The firm is ranked tenth on our list of 10 best telecom dividend stocks.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies held the most shares in the telecom provider – 5.1 million – worth more than $120 million. Oldfield Partners was 2nd with 2.1 million shares worth almost $51 million.
9. SBA Communications Corporation (NASDAQ: SBAC)
Dividend Yield: 3.94%
SBA Communications Corporation (NASDAQ: SBAC) is a Florida-based real estate investment trust which owns and operates wireless infrastructure, including small cells, distributed antenna systems, and traditional cell towers. It has a market cap of more than $30 billion and posted more than $2 billion in revenue in December 2020. It has a forward dividend yield of 3.94% and is placed ninth in our list of 10 best telecom dividend stocks.
At the end of the fourth quarter of 2020, 43 hedge funds out of 887 in the Insider Monkey database held stakes in SBA Corp, the same as in Q3 2020. The total value of the shares held by these hedge funds in Q4 2020 was over $1.8 billion, up from $1.7 billion in the preceding quarter. Out of the hedge funds being tracked by Insider Monkey, Virginia-based investment firm Akre Capital Management held the most shares – 2.4 million – worth more than $695 million. DE Shaw was 2nd with more than 730,000 shares worth almost $206 million.
8. Verizon Communications Inc. (NYSE: VZ)
Dividend Yield: 4.39%
Verizon Communications Inc. (NYSE: VZ) is a New York-based multinational telecommunications firm It has a market cap of over $238 billion and posted more than $128 billion in revenue in December 2020. The firm has a four-year average dividend yield of over 4% and the yield has stayed above 4% for the last ten years. The company is placed eighth on our list of 10 best telecom dividend stocks.
At the end of the fourth quarter of 2020, 67 hedge funds out of 887 in the Insider Monkey database held stakes in Verizon, up from 65 out of 817 in Q3 2020. The total value of the shares held by these hedge funds in Q4 2020 was over $10.5 billion, up from $2.7 billion in the preceding quarter. Out of the hedge funds being tracked by Insider Monkey, Bedford-based investment firm Berkshire Hathaway held the most shares – 146 million – worth more than $8.6 billion. DE Shaw was 2nd with 6.6 million shares worth almost $388 million.
7. Orange S.A. (NYSE: ORAN)
Dividend Yield: 5.87%
Orange S.A. (NYSE: ORAN) is a Paris-based multinational telecommunications organization which has more than 260 million customers worldwide. The company has a market cap of more than $32 billion and posted more than $51 billion in revenue in December 2020. In 2021, the average yield of the firm is 5.87%. It has a four-year average dividend yield of 5.03% which has stayed above 4% for the last ten years. Orange is ranked seventh on our list of 10 best telecom dividend stocks.
At the end of the fourth quarter of 2020, 3 hedge funds out of 887 in the Insider Monkey database held stakes in Orange, down from 4 out of 817 in Q3 2020. The total value of the shares held by these hedge funds in Q4 2020 was over $6 million, up from $4 million in the preceding quarter. Out of the hedge funds being tracked by Insider Monkey, Boston-based investment firm Arrowstreet Capital held the most shares – more than 405,000 – worth more than $4 million. Citadel Investment Group was 2nd with more than 115,000 shares worth almost $1.3 million.
6. Vodafone Group Plc (NASDAQ: VOD)
Dividend Yield: 5.93%
Vodafone Group Plc (NASDAQ: VOD) is a Berkshire-based telecommunications firm that operates in Asia, Africa, and Europe It has a market cap of more than $51 billion and posted more than $49 billion in revenue in March 2020. It has a four-year average dividend yield of 6.83% and the yield has stayed above 5% for the last ten years. Vodafone is ranked sixth on our list of 10 best telecom dividend stocks.
At the end of the fourth quarter of 2020, 17 hedge funds out of 887 in the Insider Monkey database held stakes in Vodafone, down from 22 out of 817 in Q3 2020. The total value of the share s held by these hedge funds in Q4 2020 was over $745 million, up from $677 million in the preceding quarter. Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies held the most shares – 36 million – worth more than $609 million. GoldenTree Asset Management was 2nd with 3.6 million shares worth almost $60 million.
5. China Telecom Corporation Limited (NYSE: CHA)
Dividend Yield: 6.1%
China Telecom Corporation Limited (NYSE: CHA) is a Beijing-based telecommunications company that is the largest fixed-line service and the third largest mobile telecommunication provider in China. The firm has a market cap of more than $27 billion and posted more than $60 billion in revenue in December 2020. The dividends of the firm have been steadily rising and reached more than 6% in 2020. The company is ranked fifth on our list of 10 best telecom dividend stocks
At the end of the fourth quarter of 2020, 5 hedge funds out of 887 in the Insider Monkey database held stakes in China Telecom, up from 3 out of 817 in Q3 2020. Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies held the most shares – more than 609,000 – worth more than $16 million. LMR Partners was 2nd with 63,120 shares worth almost $1.7 million.
4. China Mobile Limited (NYSE: CHL)
Dividend Yield: 6.47%
China Mobile Limited (NYSE: CHL) is a state-owned Chinese telecommunications organization that provides voice and multimedia services in China and Hong Kong. The company has a market cap of more than $1 trillion and posted more than $114 billion in revenue in December 2019. In 2021, the average yield of the firm is 6.47%. The company pays out more than 47% of earnings out as dividend. China Mobile is thus ranked fourth on our list of 10 best telecom dividend stocks.
At the end of the fourth quarter of 2020, 13 hedge funds out of 887 in the Insider Monkey database held stakes in China Mobile, up from 10 out of 817 in Q3 2020. Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies held the most shares – 6.8 million – worth more than $195 million. LMR Partners was 2nd with 1.05 million shares worth almost $30 million.
3. AT&T Inc. (NYSE: T)
Dividend Yield: 7.08%
AT&T Inc. (NYSE: T) is a Dallas-based multinational that is the world’s largest telecommunications company and the second largest provider of mobile telephone services. It has a market cap of more than $213 billion and posted more than $171 billion in revenue in December 2020. It has a four year average dividend yield of more than 6.3% and the yield has hovered around 5% for the last ten years. The firm is placed third on our list of 10 best telecom dividend stocks to buy.
At the end of the fourth quarter of 2020, 58 hedge funds out of 887 in the Insider Monkey database held stakes in AT&T, up from 51 out of 817 in Q3 2020. The total value of the shares held by these hedge funds in Q4 2020 was over $1.04 billion, down from $1.15 billion in the preceding quarter. Out of the hedge funds being tracked by Insider Monkey, Los Angeles-based investment firm Leonard Green & Partners held the most shares – 18 million – worth more than $500 million. Citadel Investment Group was 2nd with 8.5 million shares worth almost $244 million.
2. Lumen Technologies, Inc. (NYSE: LUMN)
Dividend Yield: 8.08%
Lumen Technologies, Inc. (NYSE: LUMN) is a Louisiana-based telecom firm headquartered that offers communications, network services, security, cloud solutions, voice, and managed services. It has a market cap of more than $14 billion and posted more than $20 billion in revenue in December 2020. The firm has a four-year average dividend yield of 11.69% and the yield has hovered around 7% for the last ten years. The firm is ranked second on our list of 10 best telecom dividend stocks.
At the end of the fourth quarter of 2020, 29 hedge funds out of 887 in the Insider Monkey database held stakes in Lumen, down from 31 out of 817 in Q3 2020. The total value of the shares held by these hedge funds in Q4 2020 was over $772 million, up from $762 million in the preceding quarter. Out of the hedge funds being tracked by Insider Monkey, Memphis-based investment firm Southeastern Asset Management held the most shares – 65 million – worth more than $634 million. Millennium Management was 2nd with 2.8 million shares worth almost $27 million.
1. Telefónica, S.A. (NYSE: TEF)
Dividend Yield: 9.97%
Telefónica, S.A. (NYSE: TEF) is a Madrid-based telecom provider with interests in fixed and mobile telephony, broadband and subscription television. It operates in Europe and the Americas. The company has a market cap of more than $24 billion and posted more than $50 billion in revenue in December 2020. It has an four year average dividend yield of over 6% and the yield has stayed above 5% for the last ten years. It is ranked first on our list of 10 best telecom dividend stocks.
At the end of the fourth quarter of 2020, 8 hedge funds out of 887 in the Insider Monkey database held stakes in Telefonica, down from 13 out of 817 in Q3 2020. The total value of the shares held by these hedge funds in Q4 2020 was over $9.9 million, up from $9.6 million in the preceding quarter. Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group held the most shares – 1.7 million – worth more than $6.9 million. Arrowstreet Capital was 2nd with almost 549,000 shares worth almost $2.2 million.
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Disclosure: None. 10 Best Telecom Dividend Stocks to Buy Now is originally published on Insider Monkey.
