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In general, companies in the telecom services industry pay good dividends. Among the 25 telecom services - domestic companies in the Yahoo Finance list, 13 companies pay dividends. The average yield of these companies is 5.10%, while the whole technology sector has an average yield of 3.34%.

In this article, I tried to determine which of the nine best dividend-yielding telecom services - domestic stocks, traded in the U.S., is the most attractive for dividend-seeking investors.

I consider that besides dividend yield, the consistency and the rate of raising dividend payments are the most important factors for dividend-seeking investors. Investing in companies that regularly raise dividends provides security in an uncertain market and means higher returns ahead. Companies that regularly increase dividends are generally more stable. Increasing dividends is the assurance that dividend income retains its purchasing power over time. Of course, it is also essential that a company has enough earnings growth prospects to maintain increasing dividend payments.

The nine stocks are: BCE, Inc. (NYSE:BCE), Chunghwa Telecom Co., Ltd. (NYSE:CHT), Consolidated Communications Holdings Inc. (NASDAQ:CNSL), CenturyLink, Inc. (NYSE:CTL), EarthLink Inc. (NASDAQ:ELNK), Frontier Communications Corporation (NASDAQ:FTR), AT&T, Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ) and Windstream Corporation (NASDAQ:WIN). All the data for this article were taken from Yahoo Finance and finviz.com on March 11, before the market open.

The table below presents the nine best dividend-yielding telecom services companies, their last price, their market cap, the forward annual dividend rate, the forward yield, the payout ratio and the average annual dividend rate of growth for the past five years. Since ELNK started to pay dividend in September 2009, annual dividend rate of growth for the past five years could not be calculated for this stock.

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The charts below present the dividend yield and the payout ratio for the nine best yielding telecom services companies.

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In general, the payout ratio is very high for the most of the companies.

BCE Dividend Chart

BCE Dividend data by YCharts

FTR Dividend Chart

FTR Dividend data by YCharts

BCE Dividend Yield Chart

BCE Dividend Yield data by YCharts

FTR Dividend Yield Chart

FTR Dividend Yield data by YCharts

The charts below present the forward P/E, the average annual earnings growth estimates for the next five years, the price-to-sales ratio and the price to book value of the nine companies.

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Discussion

Among the nine best dividend-yielding telecom services companies Windstream has the highest dividend yield at 11.68%, but over the past five years it did not raise its payment. In addition, the annual earnings growth estimates for the next five years of the company is negative at -8.30%, and it is not certain that it will be able to maintain such a high dividend rate.

Frontier Communications has the second-highest dividend yield at 9.83%, but the company's annual rate of dividend growth over the past five years was negative at -17.54%.

Consolidated Communications has the third-highest dividend yield at 9.09%, but over the past five years it did not raise its payment.

CenturyLink has the forth-highest dividend yield at 6.28%. The company's annual rate of dividend growth over the past ten years was very high at 25.65%, and over the past five years it was also very high at 51.31%, but CTL decreased its last payment to $0.54 from $0.725. In addition, the annual earnings growth estimates for the next five years of the company is quite low at 1.37%, and it is not certain that it will be able to maintain such a high dividend rate.

BCE has the fifth-highest dividend yield at 4.95%. The company's annual rate of dividend growth over the past ten years was quite high at 6.63%, and over the past five years it was very high at 9.44%. The annual earnings growth estimates for the next five years of the company is quite low at 1.80%, and it is not certain that it will be able to maintain such a high dividend rate.

AT&T has the sixth-highest dividend yield at 4.91%. The company's annual rate of dividend growth over the past 10 years was quite high at 5.24%, and over the past five years it was at 2.38%. The annual earnings growth estimates for the next five years of the company is at 5.80%.

The table below shows the most important parameters, for the three most attractive telecom services companies for dividend-seeking investors.

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The charts below present the historical dividend rates, the historical dividend yields and the historical prices for the three stocks.

T Dividend Chart

T Dividend data by YCharts

T Dividend Yield Chart

T Dividend Yield data by YCharts

T Chart

T data by YCharts

Conclusion

In my opinion, CenturyLink, BCE, Inc. and AT&T are the best choices among the telecom services companies I reviewed for dividend-seeking investors, due to their high yield and high rate of raising dividend payment.

Source: Which Of The 9 Best-Yielding Telecom Services Companies Is Most Attractive To Dividend Investors?