With Treasury interest rates at historic lows, a lot of income investors are looking for higher yielding investments. This not only includes investors who in the past would only invest in "safe" U.S. debt, but also those who retired with an under-sized nest egg and need more income to live on. One of the places that income-hungry investors turn to is the higher yielding investments in the Communications Services sector.
Morningstar defines the Communications Services sector as "Companies that provide communication services using fixed-line networks or those that provide wireless access and services. This sector also includes companies that provide internet services such as access, navigation and internet related software and services."
While there are some high-yielding stocks in this sector, not all fall in that category. About half the companies have very high yields, while the other half have low yields. Some are more heavily tied to the declining "land-line" industry, while others are aggressively growing their wireless business.
More than any other sector, the astute investor looking for Communications Services dividend stocks has to spend significant time understanding each company. Where it is positioned? What is its strategic plan? How will it implement its plan?
This week, I screened my Dividend Growth Stocks database for Communications Services companies with a yield above 2.0%. The results are presented below:
Telephone and Data Systems Inc. (NYSE:TDS)
Yield: 2.1% | Years of Dividend Growth: 37
Telephone and Data Systems Inc. provides wireline service in rural markets and is the majority owner of regional wireless carrier U.S. Cellular.
Atlantic Tele-Network (NASDAQ:ATNI)
Yield: 2.5% | Years of Dividend Growth: 16
Atlantic Tele-Network provides wireless and wireline telecommunications services in the Caribbean and North America.
Verizon Communications Inc. (NYSE:VZ)
Yield: 4.6% | Years of Dividend Growth: 8
Verizon Communications Inc. offers wireline, wireless and broadband services primarily in the northeastern United States. It acquired MCI in 2006 and has since sold or spun off non-core assets. Alltel was acquired in early 2009.
AT&T Inc. (NYSE:T)
Yield: 4.8% | Years of Dividend Growth: 29
AT&T Inc. (formerly SBC Communications) provides telephone and broadband service and holds full ownership of AT&T Mobility (formerly Cingular Wireless). AT&T Corp. was acquired in late 2005 and BellSouth in late 2006.
As with past screens, the data presented above is in its raw form. Some of the companies would be disqualified for poor dividend fundamentals. However some of the others may be worth additional due diligence.
My database, D4L-Data, is an Open Office spreadsheet containing more than 20 columns of information on the 220+ companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers.
Full Disclosure: Long T, CTL in my dividend growth portfolio, and VZ in my high-yield portfolio. See a list of all my dividend growth holdings here.
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