These Telecoms' Dividends Are Too Big to Ignore

Dow Jones Industrial Average powers AT&T and Verizon have such high dividends that investors should consider adding them to their portfolios.

Feb 27, 2014 at 3:30PM

The Dow Jones Industrial Average (DJINDICES:^DJI) can often be a sleepy place for investors to look for stocks. The blue chips that fill the index are often highly diversified, meaning that one news item won't cause ripples in the market like it will with smaller companies that fill the Nasdaq Composite or the S&P 500.

What the Dow can't offer in excitement, it can make up for with profit-making dividends that pay investors simply for owning a company's stock. Two of the best dividends on the Dow now come from companies you probably know well: AT&T (NYSE:T) and Verizon (NYSE:VZ).

AT&T recently upped its quarterly dividend to $0.46, giving it a 5.6% yield for investors. The consistency with which AT&T has grown revenue is impressive, and its virtual duopoly with Verizon Wireless in cellular telephones gives it incredible pricing power with customers.

T Revenue (TTM) Chart

T Revenue (TTM) data by YCharts.

Verizon's industry leading LTE network in the U.S. give it even more pricing power and has kept its payout to investors climbing. The stock's 4.6% yield isn't as high as AT&T, but I'd argue that there's more growth potential now that it owns all of cash cow Verizon Wireless.

Telecom is a long-term dream for investors
Investors shouldn't ignore these two telecom stock that are deeply ingrained in U.S. daily life. While cell phone, app, search engine, and social media companies may come and go quickly, the cell towers that carry data to our mobile devices are in higher demand today than they've ever been.

AT&T and Verizon have such large networks that as hard as Sprint and T-Mobile try they can't catch up to the fast service that customers demand. That leaves smaller carriers to compete on price, which lowers margins and reduces the ability to build out cell networks over the long term.

It's a vicious cycle that works against small cell companies but bodes well for the cash flow for AT&T and Verizon. These are high-yielding stocks today and I don't see anything but growth for these two Dow Jones Industrial Average powers in the future.

9 more great dividend stocks for you
One of the dirty secrets that few finance professionals will openly admit is the fact that dividend stocks as a group handily outperform their non-dividend paying brethren. The reasons for this are too numerous to list here, but you can rest assured that it's true. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.

Travis Hoium manages an account that owns shares of AT&T and Verizon Communications. The Motley Fool has no position in any of the stocks mentioned. 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers