7 Telecom Dividend Stocks Getting Slammed

Contrarian investors should utilize times like this to differentiate between stocks that are dropping for fundamentally sound reasons -- and those stocks that are simply being dragged down because of general market concerns. Sure, there's plenty to worry about -- gigantic federal deficits, sovereign debt problems in Europe, an economic slowdown in China. But let's not forget that in the midst of all of this volatility lies the prospect to grab some great companies at dirt cheap prices.

In particular, I'm a huge fan of dividend stocks. Renowned professor Jeremy Siegel has illustrated that from 1957 to 2003, when reinvesting dividends, the S&P's 100 highest-yielding stocks outperformed the market by an average of 3 percentage points. Over a long period of time, 3 percentage points can really add up. So if you can find dividend stocks trading cheaply and can separate the good from the bad, you may have found yourself a real winner.

In this regular series, I run a screen for dividend stocks that have gotten crushed in the past three months, in addition to companies that are trading at low P/Es. Below are the top seven dividend-paying telecom stocks (above 1%) that have gotten beaten down the most, in order, additionally rated by our own 170,000-strong CAPS community.

Company

Dividend Yield

13-Week Price Change

P/E Ratio

CAPS Rating
(out of 5)

Atlantic Tele-Network (Nasdaq: ATNI  )

2.3%

(23.5%)

15.0

***

Telefonica (NYSE: TEF  )

6.6%

(20.0%)

8.1

****

France Telecom (NYSE: FTE  )

6.3%

(11.8%)

12.5

****

Philipine Long Distance (NYSE: PHI  )

6.2%

(9.3%)

15.3

****

Turkcell Iletisim (NYSE: TKC  )

3.4%

(9.0%)

14.0

****

Tellabs (Nasdaq: TLAB  )

1.1%

(7.3%)

11.9

****

China Mobile (NYSE: CHL  )

3.3%

(6.8%)

12.0

*****

Source: Motley Fool CAPS. Data current as of Jan. 12.

A Foolish final thought
I don't see an immediate risk of any of the companies mentioned above cutting or suspending their dividends, yet they're being priced at extremely attractive levels. It's no surprise that many of these companies are European, and thanks to the sovereign debt crisis and lower growth expectations, they are certainly taking a hit. It's something important to consider, because trouble in the eurozone obviously affects each individual country. However, this could also be the perfect time to jump in the market and find that outrageous dividend stock you've been looking for. With the stock market looking up and investors looking for different ways to generate income, dividend-paying stocks such as these could have the potential to give you exactly what you're looking for.

Interested in what our Motley Fool analysts think are the best stocks for 2011? Click here to read the free article!

Jordan DiPietro owns shares of Telefonica. China Mobile is a Motley Fool Global Gains pick. France Telecom, Philippine Long Distance Telephone, and Turkcell Iletisim Hizmetleri AS are Motley Fool Income Investor recommendations. The Fool owns shares of China Mobile, and Telefonica. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (2) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 12, 2011, at 3:52 PM, TMFWysocki wrote:

    Tellabs isn't a telecom stock like the others on your list. Rather, Tellabs sells communications service providers with telecom network equipment. The company's equipment is used around the world to transmit data, video, and voice signals. Its broadband network access and transport systems enable carriers to build fiber-optic backbone networks, while its digital cross-connect systems help connect incoming and outgoing digital and fiber-optic lines. Tellabs also provides such services as product deployment, training, and technical support. The company's customers include incumbent local telephone carriers, including the regional phone service providers, cable companies, corporations, and government agencies. (Source: AOL Daily Finance)

  • Report this Comment On January 21, 2011, at 2:32 PM, BradReeseCom wrote:

    Hi Jordan,

    Here's what RBC Capital Markets Managing Director - Mark Sue had to say about Tellabs yesterday:

    "Tellabs' may post 4Q10 results slightly ahead of consensus of $418M coming in somewhat flat sequentially on the back of a seasonal flush in the North America carrier market. Product mix may enable the company to beat consensus EPS of $0.10. We believe most of the inventory digestion at its key customers may be behind the company at this stage. Tellabs may guide 1Q11 down sequentially and our view is a range of $400M to $420M vs. consensus of $403M and our $415M.

    "Wireless traffic growth is the key driver for Tellabs and the company thus far has been able to successfully defend its market position at key

    North American customers. Carriers are accelerating their 4G/LTE network expansion: Verizon plans to cover 140 additional markets by year-end 2011 and AT&T's recently announced acceleration of its LTE network deployment may all help Tellabs which needs to supplement the lack of legacy product contributions such as the 5500-series this year."

    Sue continued, "New product wise, the 8600 and 9100 are seeing encouraging traction in the U.S.and internationally. The 8600 managed edge system is designed into more than 140 networks worldwide and its flexible nature can help operators transition networks from 3G to 4G. The 9100 SmartCore Platform now has >12 customers and >20 active trials."

    Sue added, "Gross margins remain highly variable and are product mix dependent. In recent quarters Tellabs has benefited from a slower than expected decline in legacy products which kept margins high. Near-term, while GMs may be better than the guided 44%, a lot of variability remains. Management remains focused on returning capital to shareholders. The company repurchased 15.6M shares for $111M in 3Q10 and we may see similar levels. Tellabs instituted a $0.02 quarterly dividend during 1Q10 which we expect once again."

    Sue concluded, "The late addition of Alcatel-Lucent into AT&T's domain remains an overhang for Tellabs' shares and we don't expect any firm clarity near-term. Having said that Tellabs has made strong investments in new product development, has expanded its international customer base and the shares are trading at just 0.9x a discount to the 5-year historical average of 1.2x EV/Sales. Our rating on Tellabs remains Sector Perform."

    Sincerely,

    Brad Reese

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11/25/2014 3:59 PM
ATNI $67.55 Down -0.71 -1.04%
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CHL $61.97 Down -0.58 -0.93%
China Mobile CAPS Rating: ****
ORAN $17.15 Down +0.00 +0.00%
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PHI $65.74 Up +0.05 +0.08%
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