Despite the outsized gains by the bond proxy sectors this year, which include telecoms, utilities and real estate investment trusts (REITs), one of those sectors still trades cheap to the S&P 500.
While utilities trade at 17.3 times estimated 2016 earnings and REITs at 18.8, telecoms trade at a low 13.8 times, which is far below the S&P 500 at 16.6%.
In addition, the telecoms have been hit by waves of profit-taking, which have knocked them down into a range that looks inviting.
In an interesting note, RBC makes the case that while the bond proxy stocks are definitely at a premium, as a group they trade in line with the S&P 500.
While acknowledging that they may be more susceptible to rising rates, the firm also cites investor appetite for them when yields remain low, which they could for some time.
We screened for quality telecom stocks that pay solid and dependable dividends. These four look very attractive now.
Here are the results.... -> 9 Domestic Telecom Stocks With Yields Over 3%