With interest rates near 0% and traditional income investments, like savings accounts and certificates of deposits (CDs), earning next to nothing, blue-chip telecom stocks like AT&T (NYSE: T) and Verizon (NYSE: VZ) have become wildly popular. #-ad_banner-#That makes sense. Telecom is a “recession-proof” industry. Regardless of what’s happening with the economy, people will still need cell phones and cable TV. And with both stocks yielding around 5%, they look like a good choice for income investors in search of high yields. But there’s a problem. As with a lot of American blue chips, these… Read More
With interest rates near 0% and traditional income investments, like savings accounts and certificates of deposits (CDs), earning next to nothing, blue-chip telecom stocks like AT&T (NYSE: T) and Verizon (NYSE: VZ) have become wildly popular. #-ad_banner-#That makes sense. Telecom is a “recession-proof” industry. Regardless of what’s happening with the economy, people will still need cell phones and cable TV. And with both stocks yielding around 5%, they look like a good choice for income investors in search of high yields. But there’s a problem. As with a lot of American blue chips, these stocks look expensive right now. AT&T and Verizon sport price-to-earnings, or P/E, ratios of 29 and 21, respectively — well above the S&P 500s historical average of 15. And while a 5% dividend yield might seem like a lot, in the telecom industry, you can find much higher yields… and at a much better price. For example, I’ve found a telecom that’s currently yielding 7.7%. It enjoys the same competitive advantages as both AT&T and Verizon, and better yet, it’s trading at a P/E ratio of less than 12, making it a much better… Read More