Wireless and mobile communications have been a growth story for about 30 years now, and the tailwinds just keep blowing.
Investors who want some of that wind in their sails can take different tacks, buying telecom stocks ranging from developers of speculative new technologies to the industry's biggest names, including reliable providers of dividend income characteristic of the most disciplined, established corporations.
Two of the latter are Verizon Wireless (VZ 1.17%) and American Tower (AMT -0.70%). These companies share a symbiotic relationship in the telecommunications industry, with Verizon relying on American Tower's infrastructure for its wireless network expansion, while American Tower benefits from Verizon's continued growth and demand for tower and antenna space. They also pay reliable dividends.
VZ Total Return Level data by YCharts
That chart shows how much Verizon and American Tower have each grown a $100 investment since Verizon's launch in June 2000. American Tower's total return particularly skyrocketed since it became a real estate investment trust (REIT) in 2012. AMT itself went public in 1998 as a spinoff from CBS/Viacom, now Paramount Global (NASDAQ: PARA).
Meanwhile, 42% of American Tower's income comes from the three largest mobile carriers: T-Mobile at 17%, AT&T at 13%, and Verizon at 12%. That's a lot of concentration from just three tenants, but those are massive operations depending on mission-critical space on towers and antennas that they don't want to develop and operate themselves.
And while you can buy shares in any of those three mobile telecom giants, only one of them is on a nearly two-decade streak of dividend increases.
Verizon the mobile mammoth and dividend machine
When Verizon boosted its quarterly payout by $0.0125 per share to $0.665 last September. That marked 17 consecutive years of dividend boosts, which the company touts as the longest current streak in the U.S. telecom industry.
Chairman and CEO Hans Vestberg cited strong cash flow from the company's network-as-a-service strategy for the ability to continue delivering shareholder value.
Having lots of customers helps, too. Verizon operates in more than 150 countries and claims 99% coverage of the U.S. population for its 4G LTE services, 115 million wireless retail consumer connections, and another 30 million connections for the Verizon Business Group.
There also are nearly 1,500 retail locations and myriad other services, now including data center and edge computing, that has seen Verizon become one of the most recognizable brands on the planet since its creation in June 2000 through the merger of Bell Atlantic and GTE.
Verizon stock is currently yielding about 6.6% at share price of about $40, and analysts give it a consensus target price of $44, so this could be a nice time to pick up some shares of this accomplished dividend payer.
American Tower as the mobile infrastructure giant
American Tower owns and operates about 225,000 communications sites around the world, including more than 42,000 tower sites across the United States and about 5,100 rooftop sites in optimal locations to fill network demands. Edge cloud computing and data centers also are a growing segment of its business.
The tenants include wireless service providers, of course, but also radio and television broadcast companies, wireless data providers, government agencies and municipalities, and companies in various other industries.
American Tower has raised its dividend for a dozen straight years and is now yielding about 3.6% at a share price just under $200. Analysts give this largest of infrastructure REITs a consensus target price of $219.67, pointing to some possible nice upside to go along with that steady dividend flow.
Gain some growth for that $200
Both these companies are on the S&P 500: Verizon is currently at 48th, with a market cap of about $168 billion, and American Tower sits at 106th, with a market cap of $89 billion. That alone helps underpin demand for their stock through exchange-traded funds and other investment instruments that track that major index.
But much more important is the continued and growing cash flow for Verizon's technology and communications services, and American Tower's essential role in providing essential infrastructure. Split that $200 between them and watch their growth continue in your own portfolio, too.
