The telecommunications sector is vital for global connectivity. It comprises companies that enable data, voice, and video to be sent worldwide. These companies provide services like mobile network, broadband internet access, and satellite communications. Major players in this sector often benefit from having substantial, recurring customer bases and significant infrastructure investments, which can provide stable cash flows and dividends.
However, investing in telecom stocks has its challenges. The sector requires continuous capital expenditure to upgrade technology and expand network capacity, particularly with the ongoing rollout of 5G networks. This can strain financials, especially for smaller players. Additionally, the telecom industry is highly regulated. With this, shifts in regulatory landscapes can impact profitability. Competition is fierce, too, with price wars often eroding margins.
For investors, telecom stocks can offer steady dividends and are considered defensive plays during economic downturns. This is due to consistent consumer demand for connectivity. However, the growth potential may be limited compared to other sectors. For example, technology, and the heavy regulatory environment can introduce uncertainty. With this in mind, let’s explore two telecom stocks to watch in the stock market right now.
Telecom Stocks To Buy [Or Avoid] Now
Verizon Communications (VZ Stock)
To begin, Verizon Communications Inc. (VZ) is a global leader in delivering wireless and wireline communications services to consumer, business, government, and wholesale customers. In addition to mobile network services, Verizon also offers broadband, network access, security and managed network services, and global Internet Protocol (IP) network services.
Today, Monday, Verizon announced better-than-expected Q1 2024 financial results. Diving in, the company notched in earnings of $1.15 per share, with revenue of $32.98 billion for the first quarter of 2024. For context, this is in comparison with Wall Street’s estimates for the quarter which were earnings estimates of $1.12 per share, along with revenue estimates of $33.38 billion.
In 2024 year-to-date, shares of Verizon Communications stock is up 2.91% so far. Meanwhile, during Monday morning’s trading action, VZ stock opened lower on the day by 1.26%, currently trading at $40.22 a share.
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AT&T (T Stock)
Second, AT&T Inc. (T) is a diversified, global leader in telecommunications, media, and entertainment. It provides wireless communications, high-speed Internet, and digital TV services to millions of customers in the United States and operates an extensive network of mobile and fixed-line services. AT&T is also involved in the production and distribution of entertainment and media.
Back in February, AT&T announced when it will report its first quarter 2024 financial results. In detail, the telecom giant is set to report its Q1 2024 financial results this week, Wednesday, April 24, 2024. The results will be posted before the U.S. stock market opens.
This year so far, shares of T stock have fallen by 4.72% YTD. While, during Monday morning’s trading session, AT&T stock opened red by 0.60%, trading at $16.41 a share.
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