In this article, we discuss 10 best telecom dividend stocks to buy for 2024. You can skip our detailed analysis of the telecom industry, its performance, and outlook for 2024, and go directly to read 5 Best Telecom Dividend Stocks To Buy for 2024.
The telecommunications industry holds a crucial position within the US, drawing significant attention from investors owing to its consistent drive for innovation and swift progressions. With the rapid advancement of technology, telecom companies not only provide traditional voice and data services but also enable innovations like 5G networks, IoT applications, and cloud computing, fostering digital transformation across various sectors. For this reason, the US telecom industry plays a pivotal role in driving the country's economy forward. According to a report commissioned by the Cellular Telecommunications Industry Association (CTIA) in 2018, the wireless sector in the US contributed a staggering $475 billion to the nation's economy on an annual basis and sustained employment for 4.7 million individuals. The analysis, conducted by Accenture plc (NYSE:ACN), revealed that the U.S. wireless industry represented 2.6 percent of the total GDP of the country in 2016, positioning it as comparable to the 24th largest global economy.
Expanding upon these advancements, a report by Deloitte predicts that by 2024, consumers in the United States will have a significantly broader range of choices for broadband connectivity. The report highlighted a growing trend of households in the US adopting wireless solutions for their internet needs. According to Deloitte's 2023 Connected Consumer Survey, there has been a notable increase in the adoption of fixed wireless connections, with 12% of home internet users opting for this option, up from 6% in the previous year's survey. Moreover, the majority of these users (52%) reported that their fixed wireless connection is powered by 5G technology, marking a substantial rise from the previous year's figure of 32%. The report also underscored the rapid growth of 5G Fixed Wireless Access (FWA), which accounted for 90% of net additional broadband internet subscribers in 2022 and is projected to maintain a strong presence, capturing 80% to 90% of market share through 2024.
While the telecom sector didn't experience the most significant decline in 2023 compared to other industries, the stocks didn't see remarkable growth throughout the year either. The S&P Telecom Select Industry Index, which monitors the performance of stocks within various telecom-related sub-industries, including alternative carriers, communications equipment, integrated telecom services, and wireless telecom services, dropped by 2.12% in 2023. Warner Bros. Discovery, Inc. (NASDAQ:WBD) and Comcast Corporation (NASDAQ:CMCSA) managed to surpass the performance of the S&P 500 last year, albeit by a small margin. However, The Walt Disney Company (NYSE:DIS) and Paramount Global (NASDAQ:PARA) fell short and underperformed compared to the index.
Unfortunately, the trend hasn't improved in 2024, as the index has already lost around 4.44% since the beginning of the year. However, analysts hold some optimism for the sector this year on certain fronts, according to a report by CNBC. The resolution of actors’ and writers’ strikes is seen as a positive development. Additionally, with the upcoming 2024 U.S. presidential election, there's an expectation for an increase in advertising spending, particularly as global TV ad revenue is projected to decline by 18% this year, as reported by media investment firm GroupM. Companies like Warner Bros. Discovery, Inc. (NASDAQ:WBD) and The Walt Disney Company (NYSE:DIS) have taken significant measures such as job cuts and reducing content costs substantially to enhance free cash flow and address debt concerns. This strategic move might instill confidence in investors regarding their future business prospects. Notably, The Walt Disney Company (NYSE:DIS) has recently reinstated its dividend for early 2024, following a suspension that lasted over three years.
Besides these aspects, telecom stocks are recognized for offering dividends to their shareholders. Numerous companies within the sector have a long-standing history of distributing regular dividends, indicating their commitment to returning value to investors. Furthermore, their strong cash positions suggest that they are well-positioned to sustain these dividend payments in the foreseeable future. In this article, we will take a look at some of the best dividend stocks from the telecom sector.
For this list, we scanned Insider Monkey’s database of 933 hedge funds as of Q4 2023 and selected stocks that belong to the telecom sector or provide services in the industry and pay dividends to shareholders. From the resultant list, we picked 10 stocks with the highest number of hedge fund investors and ranked them in ascending order of hedge funds’ sentiment towards them. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
10. Cogent Communications Holdings, Inc. (NASDAQ:CCOI)
Number of Hedge Fund Holders: 19
Cogent Communications Holdings, Inc. (NASDAQ:CCOI) is a multinational internet service provider (ISP) that offers high-speed Internet access and data transport services to businesses and individuals worldwide. The company currently offers a quarterly dividend of $0.955 per share, having raised it by 1.1% in November 2023. This marked the company's 12th consecutive year of dividend growth, which makes CCOI one of the best dividend stocks from the telecom sector. The stock's dividend yield of 4.99%, as of February 18.
At the end of Q4 2023, 19 hedge funds in Insider Monkey's database reported having stakes in Cogent Communications Holdings, Inc. (NASDAQ:CCOI), down slightly from 20 in the previous quarter. With over 1 million shares, Harspring Capital Management was the company's leading stakeholder in Q4.
BCE Inc. (NYSE:BCE) is a leading Canadian telecommunications and media company. It owns and operates various media properties, including television networks, radio stations, and digital media assets. On February 8, the company declared a 3.1% hike in its quarterly dividend to C$0.9975 per share. This marked the company's 14th consecutive year of dividend growth, which places BCE on our list of the best dividend stocks from the telecom sector. The stock's dividend yield on February 18 came in at 7.87%.
The number of hedge funds tracked by Insider Monkey owning stakes in BCE Inc. (NYSE:BCE) grew to 19 in Q4 2023, from 15 in the previous quarter. The collective value of these stakes is over $78.5 million. Among these hedge funds, Millennium Management was the company's leading stakeholder in Q4.
A Canadian telecommunications company, TELUS Corporation (NYSE:TU) is next on our list of the best dividend stocks from the telecom industry. The company currently pays a quarterly dividend of C$0.3761 per share and has a dividend yield of 6.30%, as of February 18. It has been rewarding shareholders with growing dividends since 2004.
As of the close of Q4 2023, 20 hedge funds tracked by Insider Monkey held stakes in TELUS Corporation (NYSE:TU), growing from 14 in the previous quarter. These stakes have a collective value of nearly $77 million.
Telephone and Data Systems, Inc. (NYSE:TDS) is an American diversified telecommunications company that provides wireless telecommunications services through its subsidiary, U.S. Cellular. These services are provided to residential, business, and wholesale customers in select markets across the country. The company announced a 2.7% hike in its quarterly dividend on February 16 to $0.19 per share. Through this increase, the company achieved its 49th annual dividend growth. With a dividend yield of 5.27% as of February 18, TDS is one of the best dividend stocks from the telecom sector.
At the end of December 2023, 28 hedge funds in Insider Monkey's database reported having stakes in Telephone and Data Systems, Inc. (NYSE:TDS), up from 27 in the preceding quarter. These stakes have a consolidated value of more than $202.7 million. With more than 2 million shares, Third Point was the company's leading stakeholder in Q4.
Iridium Communications Inc. (NASDAQ:IRDM) is a company that operates a global satellite constellation network, providing various communication services to businesses, governments, and individuals worldwide. The company started paying dividends in 2022 and currently pays a quarterly dividend of $0.13 per share. As of February 18, the stock offers a dividend yield of 1.73%.
Insider Monkey's database of Q4 2023 indicated that 33 hedge funds owned stakes in Iridium Communications Inc. (NASDAQ:IRDM), growing from 28 in the previous quarter. Silver Heights Capital Management owned over 2.6 million shares in the company, becoming its leading stakeholder in Q4.
Baron Funds mentioned Iridium Communications Inc. (NASDAQ:IRDM) in its Q3 2023 investor letter. Here is what the firm has to say:
“Iridium Communications Inc. (NASDAQ:IRDM) is a leading mobile voice and data communications services vendor offering global coverage via satellite. Shares fell on second quarter earnings, growth modestly slower than expected. Investors were also concerned by a potential slowdown in Iridium’s voice and data segment following several years during which the segment benefited from price increases and competition displacements. We attribute the earnings miss to a one-time write off of a spare satellite. This will not impact the company’s long-term prospects. We also remain excited about the potential benefit from Iridium’s recent partnership with Qualcomm to allow satellite connectivity on its new Snapdragon chips. While Iridium has suggested the realization of the direct-to-device opportunity might take longer than some investors had hoped, we believe the collaboration will yield substantial revenue for the company over time. We also remain excited about the company’s capital allocation program, which should benefit shareholders in the years ahead.”
