In this article, we discuss 10 best telecom dividend stocks to buy for 2022. You can skip our detailed analysis of the telecom sector and its outlook, and go directly to read 5 Best Telecom Dividend Stocks to Buy for 2022.
The telecommunications sector is one of the most diversified industries, operating in satellite communications, broadband, and cables. The global telecommunications industry has evolved over the years and brought forward several new tools to facilitate users. The onset of the pandemic brought these tools into play when many corporations changed their business models and employees embraced remote work. Considering the ever-increasing demand for broadband and cloud-based services, the telecom services market is expected to grow at a CAGR of 4.85% from 2022 to 2030, reaching $2.65 trillion, according to a report by Globe Newswire.
The recent technological advances have significantly changed the overall operations of the telecom industry. The ongoing rollout of 5G technology is expected to drive innovation in the sector. Some of the major telecom companies are already investing heavily in the 5G network to innovate their business models. According to a report by PwC, telecom companies are expected to spend over $57 billion in the 5G market over the next four years. Another report by Bloomberg also sheds light on the growth of the global 5G services market, which is expected to expand at a CAGR of 52% by 2030. Due to this progress and possible growth prospects, investors are favoring telecom stocks. Moreover, their generous dividends to income investors also contribute to the popularity of these defensive securities.
Telecom stocks have also outperformed the broader market from December 2007 through May 2018. The S&P 500 Communications Services delivered an annual average return of 9.9%, compared with a 7.25% return of the S&P 500, as reported by Business Insider. The report also mentioned that the sector accounted for over 10% of the wider market.
According to analysts, the telecom sector can offer great potential for price appreciation than the overall market. Some of the best telecom stocks include AT&T Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ), and Comcast Corporation (NASDAQ:CMCSA), among others that are discussed below.
The stocks mentioned in this list belong to the telecom sector and pay dividends to shareholders. They are ranked according to their dividend yields, as of October 18. These companies have strong fundamentals and their dividends are safe. These stocks are also receiving strong ratings from the Wall Street.
Switch, Inc. (NYSE:SWCH) is a Nevada-based telecommunications company that develops and operates data center facilities. The company also provides cloud services to its consumers. In Q2 2022, the company reported an operating cash flow of over $85.4 million, compared with $64.4 million during the same period last year. At the end of June, it had over $31.2 million available in cash and cash equivalents and $66.8 million in total current assets.
Switch, Inc. (NYSE:SWCH) started paying dividends in 2017 and has raised its dividend every year since. This makes it one of the best dividend stocks on our list. It currently pays a quarterly dividend of $0.525 per share and has a yield of 0.62%, as of October 18.
At the end of Q2 2022, 31 hedge funds in Insider Monkey owned stakes in Switch, Inc. (NYSE:SWCH), growing from 14 in the previous quarter. These stakes have a consolidated value of over $1.14 billion. Among these hedge funds, Pentwater Capital Management owned the largest position in the company in Q2.
In addition to some of the best dividend stocks from the telecom sector like AT&T Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ), and Comcast Corporation (NASDAQ:CMCSA), Switch, Inc. (NYSE:SWCH) is also gaining attention among investors.
American Tower Corporation (NYSE:AMT) is an American real estate investment trust company that owns and operates telecommunications infrastructure in the country. In October, KeyBanc maintained its Overweight rating on the stock with a $264 price target. The firm presented a constructive outlook on the sector in view of the strong leasing trends in the US.
On September 22, American Tower Corporation (NYSE:AMT) announced a 3% hike in its quarterly dividend to $1.47 per share. This was the company’s 11th consecutive year of dividend growth, coming through as one of the best dividend stocks from the telecom sector. As of October 18, the stock has a dividend yield of 3.05%.
In the second quarter of 2022, American Tower Corporation (NYSE:AMT) reported an operating cash flow of $915.3 million while its free cash flow came in at $545.2 million. During the quarter, the company's AFFO attributable to common shareholders grew by 7% to $1.15 billion. Its revenue of $2.67 billion showed a 16.3% growth from the same period last year.
At the end of June 2022, 52 hedge funds tracked by Insider Monkey owned stakes in American Tower Corporation (NYSE:AMT), up from 50 in the previous quarter. These stakes are valued at over $4.37 billion. Charles Akre and Ken Fisher were the company’s most prominent stakeholders in Q2.
Baron Funds mentioned American Tower Corporation (NYSE:AMT) in its Q2 2022 investor letter. Here is what the firm has to say:
“American Tower is a leading global tower company with 220,000 communication sites globally and over 40,000 in the U.S. We added to our position during the market dislocation and as it became increasingly clear that the company would put permanent equity financing in place at better-than-expected terms for its previously announced acquisition of CoreSite (thereby removing the “equity overhang”).
In addition, the company stepped back from a large potential deal in Europe, which would have required significant incremental funding, due to unfavorable contract terms and price. This decision further reinforced our confidence in management’s capital allocation discipline knowing that these were highly sought-after assets.”
A Philadelphia-based telecommunications company, Comcast Corporation (NASDAQ:CMCSA) is another best dividend stock on our list. The company has been raising its dividends consistently for the past 14 years. Currently, it offers a quarterly payout of $0.27 per share for a dividend yield of 3.50%, as recorded on October 18.
Comcast Corporation (NASDAQ:CMCSA) has a strong balance sheet, which indicates continuous dividend payments over the next years as well. The company generated $3.2 billion in free cash flow during Q2 2022 and paid $1.2 billion in dividends. Moreover, it generated over $30 billion in revenue during the quarter, which saw a 5.2% growth from the same period last year.
In October, Morgan Stanley maintained an Overweight rating on Comcast Corporation (NASDAQ:CMCSA) with a $45 price target. The firm believes that broadband revenue growth is driven by pricing and average revenue per user.
As of the close of June 2022, 75 hedge funds tracked by Insider Monkey owned stakes in Comcast Corporation (NASDAQ:CMCSA), down from 78 in the previous quarter. The collective value of these stakes is nearly $5.4 billion.
Mawer Investment Management mentioned Comcast Corporation (NASDAQ:CMCSA) in its recently-published Q3 2022 investor letter. Here is what the firm has to say:
“There are a few other segments of our portfolios that displayed weakness in the quarter. Cable and telecommunication companies have been an area that has lagged the broader market as their worlds are increasingly colliding. Companies such as Comcast (NASDAQ:CMCSA) has been impacted as wireless operator is spending heavily to attract internet subscribers with fixed wired access and the cable companies are trying to build wireless businesses.”
Rogers Communications Inc. (NYSE:RCI) is a Canadian telecommunications company that mainly operates in the fields of wireless communications, cable, and the internet. In October, Scotiabank maintained an Outperform rating on the stock with a C$69.50 price target, appreciating the company's evolving business model in current times. National Bank also holds an Outperform rating on the stock in October.
In Q2 2022, Rogers Communications Inc. (NYSE:RCI) reported a strong cash position. The company's operating cash flow came in at C$1.3 billion, up 30% from the same period last year. It generated C$451 million in free cash flow, compared with C$302 million in the prior-year quarter. The company's cash flow was strong as it paid $252 million in dividends to shareholders during the quarter.
Rogers Communications Inc. (NYSE:RCI) has not raised its dividend since 2019 but maintained its payments during this period. It currently pays a quarterly dividend of C$0.50 per share with a dividend yield of 4.01%, as of October 18.
At the end of Q2 2022, 12 hedge funds tracked by Insider Monkey owned stakes in Rogers Communications Inc. (NYSE:RCI), compared with 14 in the previous quarter. The collective value of these stakes is roughly $300 million. With over 3.2 million shares, Renaissance Technologies was the company's leading stakeholder in Q2.
Diamond Hill Capital mentioned Rogers Communications Inc. (NYSE:RCI) in its Q1 2022 investor letter. Here is what the firm has to say:
“Rogers Communications reported a solid Q4 as the firm continues to recover from prior COVID-related pressures on service revenue and customer acquisition. The resolution of recent board-level discord also may have contributed to the share price appreciation during the quarter.”
Telephone and Data Systems, Inc. (NYSE:TDS) is a Chicago-based telecommunications company that deals in wireless products and services.
On August 11, Telephone and Data Systems, Inc. (NYSE:TDS) declared a quarterly dividend of $0.11 per share, consistent with its previous dividend. In 2022, the company extended its dividend growth streak to 47 years and its 5-year dividend CAGR stands at 3.22%. As of October 18, the stock’s dividend yield came in at 4.81%.
In the first six months of 2022, Telephone and Data Systems, Inc. (NYSE:TDS) reported an operating cash flow of $578 million, compared with $363 million during the same period last year. The company's free cash flow for the period came in at $290 million, up from $82 million in the prior-year quarter. Its revenue for Q2 saw a 3.1% year-over-year at $1.35 billion.
Telephone and Data Systems, Inc. (NYSE:TDS) remained famous among elite funds in Q2 2022, as 16 hedge funds in Insider Monkey’s database owned stakes in the company, up from 12 in the previous quarter. These stakes have a total value of nearly $63.6 million. GAMCO Investors was the company's leading stakeholder in Q2.
Telephone and Data Systems, Inc. (NYSE:TDS) can be a valuable addition to dividend portfolios alongside some of the best dividend stocks, such as AT&T Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ), and Comcast Corporation (NASDAQ:CMCSA).
