Long term investors love solid, high-yield, high-dividend paying stocks. The whole point behind a dividend is the intrinsic value it adds as a premium to ones return-on-investment or ROI. For example, if I bought XYZ at $30 in Jan. and it closed at $33 in Dec. I'd have a 10% ROI, now if we factor in the 2% annual dividend, I'd have a portfolio worth $33.60 or a 12% ROI. The four telecom companies I chose for this article have both very nice yields and very good long term prospects.
Verizon Communications, Inc. (VZ) - As one the leading US wireless service providers, VZ had a pretty decent quarter by most standards. Sales of Apple's (AAPL) iPad were up, even though sales of the iPhone were down, when compared to the Christmas quarter (4.2 million units vs. 3.2 million units). Investors should understand, those numbers still translate into another 3.2 million iPhones sold, and if you ask me that's pretty awesome, considering they do represent one-half of all Verizon devices sold.
VZ currently yields 5.2% ($2.00/share) and trades at a P/E ratio of 41.5, which may make it less attractive when compared to the other stocks in this article. The long term success of Verizon lies within its FiOS and wireless business. They've had very good success with the Apple brand of products on the wireless side, however investors must keep an eye out for the continued reach of FiOS (Verizon's Fiber Optic Television Service). The more cities and towns FiOS can reach, the greater the domestic market share Verizon has versus DirecTV and other cable providers.
Telecom Corp. of New Zealand (NZT) - Headquartered in Auckland, New Zealand and currently yielding 12.6% ($1.29/share), NZT is one of the unknown darlings in the telecom sector. Focused primarily on providing telecom services to individual and commercial customers in Australia and New Zealand, NZT has been moving along quite nicely.
The recent spin-off of Chorus in an effort to master its core business has investors smiling from ear to ear. Why? NZT's long term growth lies within the mastering of both their 3G and Fixed-Line domestic capabilities, which should allow NZT to gain even more market share and generate even higher revenues. Investors should be pleased not only with recent performance by given the cash NZT has may be in store for increased distribution in the coming quarters.
Chunghwa Telecom Co. Ltd. (CHT) - Founded in 1996, and headquartered in Taipei, Taiwan, Chunghwa Telecom is one of the leading providers of domestic telecommunications services in the region. CHHT currently yields 5.1% ($1.50/share) and trades at a P/E of 14.45, making it an attractive investment.
Long term investors should be a little cautious on CHT and look deeper than just the attractive yield. A recent investment by management into China Airlines has some investors questioning the use of its excess cash. They very well may be cash happy, however I too would disagree in such an investment. They're better off boosting the dividend and giving some of the excess cash back to shareholders or making a more sensible acquisition.
CenturyLink, Inc. (CTL) - CenturyLink currently trades with a P/E ratio of 35.6 and yields 7.7% ($2.90). Investors should continue to stay positive on CTL and acquire more positions as they continue to grow especially in the rural regions of the US. For the coming quarter, analysts are expecting EPS of $0.58/share on revenue of $4.61 billion, even though I think CTL beats by $0.03 - $0.05/share on revenue of $4.75 billion or higher.
As the number one provider in the rural-telecom services industry, CenturyLink is the third largest U.S. based telecom company in terms of market cap, currently valued at $23.6 billion. Through a series of acquisitions CTL became one of the top-tier telecom providers. They had acquired Embarq, which was a local telephone services provider from Sprint Nextel (S), followed by the acquisition of Qwest Communications and Savvis. All three acquisitions have contributed nicely to CTL's long term growth, and the continued strength of its dividend remains one of the positive growth factors for the company.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
