In this article, we discuss 10 best telecom dividend stocks to buy for 2023. You can skip our detailed analysis of the telecom sector and its future outlook, and go directly to read 5 Best Telecom Dividend Stocks To Buy for 2023.
The telecom sector in the US is a vital component of the country's economy and plays a critical role in connecting people, businesses, and institutions. The sector includes a diverse range of companies, including telecommunications service providers, cable companies, satellite service providers, and internet service providers. The continuously changing trends in the sector have brought forward the increased deployment of broadband, 5G, and cloud-based services. Due to these factors, the industry is likely to show solid growth in the future. According to a recent report, the global telecom market jumped from $2.8 trillion in 2022 to $3.04 trillion in 2023, growing at a CAGR of 6%. The report further mentioned that the global telecom market is likely to grow at a CAGR of 5.8% through 2027, with a total value of $3.81 trillion.
Technological advancements are a significant driver of change in the telecom industry. New technologies such as 5G, the Internet of Things (IoT), and Artificial Intelligence (AI) are transforming the way people communicate, and creating new opportunities for telecom companies to develop and offer new products and services. In addition to this, the deployment of 5G standalone (SA) networks is growing globally, as telecom operators and technology vendors work to expand the capabilities of 5G technology. The investments in 5G SA grew from 52 operators in the third quarter of 2020 to 111 operators in the first quarter of 2022, as reported by Deloitte. The report also mentioned that at least 200 operators are expected to invest in 5G SA by the end of 2023. To know more about the sector’s outlook, readers can have a look at 11 Best Telecom Stocks To Buy.
Artificial Intelligence (AI) is increasingly becoming an important part of the telecom industry. It can be applied in various areas of the sector, including network management, customer services, and marketing. Moreover, AI is being used in various ways in the semiconductor industry, which also plays an important role in the development and advancement of the telecom sector. Deloitte predicts that some of the leading semiconductor companies will spend nearly $300 million on AI tools for designing chips in 2023. The figure is expected to reach $500 million in 2026.
Due to the increased demand for high-speed internet services and the deployment of 5G networks, telecom stocks have shown positive performance over the years. In our previous article on the same subject matter, we reported that the S&P 500 Communications Services delivered an annual average return of 9.9% from December 2007 through May 2018, compared with a 7.2% return of the broader market. The index is up 23.3% year-to-date, whereas the S&P 500 is up 8.4%, as of the close of April 13. Some of the best stocks in the telecom sector include AT&T Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ), and Comcast Corporation (NASDAQ:CMCSA) as these companies have strong balance sheets and pay regular dividends to shareholders.
For this list, we selected stocks that belong to the telecom sector or provide services in the industry and pay dividends to shareholders. We have assessed the hedge fund sentiment from Insider Monkey’s database of 943 elite hedge funds tracked as of the end of the fourth quarter of 2022. The stocks are ranked in ascending order of the number of hedge funds having stakes in them.
Bell Canada Enterprises Inc, or BCE Inc. (NYSE:BCE), is a Canadian holding company that provides telecommunications and various mass media services to its consumers. In the fourth quarter of 2022, the company posted revenue of C$6.44 billion, which was up 3.7% from the same period last year. Its operating cash flow for the quarter came in at over $2 billion and its free cash flow stood at $376 million, up 18% and 64.2% from the prior-year quarter, respectively.
On February 2, BCE Inc. (NYSE:BCE) declared a 5.2% hike in its quarterly dividend to C$0.9675 per share. This was the company's thirteenth consecutive year of dividend growth, which makes it one of the best dividend stocks on our list. The stock has a dividend yield of 5.88%, as of April 12. In addition to AT&T Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ), and Comcast Corporation (NASDAQ:CMCSA), BCE Inc. (NYSE:BCE) can also be added to dividend portfolios.
BMO Capital maintained an Outperform rating on BCE Inc. (NYSE:BCE) in February with a C$64 price target, highlighting the company's overall performance.
At the end of Q4 2022, 9 hedge funds in Insider Monkey's database owned stakes in BCE Inc. (NYSE:BCE), compared with 10 in the previous quarter. These stakes have a consolidated value of over nearly $97.5 million. Among these elite funds, Two Sigma Advisors was the company's leading stakeholder in Q4.
Spok Holdings, Inc. (NASDAQ:SPOK) is a Virginia-based company that provides secure texting apps for smartphones and tablets for hospitals and other healthcare organizations. The company also offers critical communication solutions to its consumers. Since the beginning of the year, the stock delivered a 40.7% return to shareholders and its 12-month gains came in at 46.4%, as of April 12.
On March 14, Spok Holdings, Inc. (NASDAQ:SPOK) declared a quarterly dividend of $0.3125 per share, which was in line with its previous dividends. As of April 12, the stock has a dividend yield of 10.46%.
In December, Lake Street assumed its coverage on Spok Holdings, Inc. (NASDAQ:SPOK) with a Buy rating and a $15 price target, appreciating the company's high dividend and balance sheet.
The number of hedge funds tracked by Insider Monkey owning stakes in Spok Holdings, Inc. (NASDAQ:SPOK) grew to 13, from 10 a quarter earlier. The collective value of these stakes is over $27.4 million. GLG Partners owned the largest stake in the company worth over $5.4 million.
TELUS Corporation (NYSE:TU) is a Canadian telecommunications company that provides related products and services to its consumers. It is one of the best dividend stocks on our list as the company has been making uninterrupted dividend payments to shareholders since 2004. It currently pays a quarterly dividend of C$0.3511 per share, having raised it by 4% in November 2022. The stock's dividend yield on April 12 came in at 4.76%.
In the fourth quarter of 2022, TELUS Corporation (NYSE:TU) posted revenue of C$5.06 billion, which saw a 4% growth from the same period last year. The company's cash position remained strong during the quarter as it generated over C$1.1 billion in operating cash flow and its free cash flow came in at C$323 million. Throughout FY22, it returned nearly $1.8 billion to shareholders in dividends.
In February, JPMorgan maintained an Overweight rating on TELUS Corporation (NYSE:TU) with a C$33 price target, following the company's Q4 earnings beat.
At the end of December 2022, 17 hedge funds in Insider Monkey’s database owned stakes in TELUS Corporation (NYSE:TU), worth over $255 million collectively. With over 3.5 million shares, Schonfeld Strategic Advisors was the company’s leading stakeholder in Q4.
7. Cogent Communications Holdings, Inc. (NASDAQ:CCOI)
Number of Hedge Fund Holders: 18
Cogent Communications Holdings, Inc. (NASDAQ:CCOI) is a Washington-based company that provides services related to internet and data transport. Following the company's Q4 earnings, RBC Capital raised its price target on the stock to $69 in March with an Outperform rating on the shares.
Since the beginning of this year, Cogent Communications Holdings, Inc. (NASDAQ:CCOI) gained 20.06% and in the past 12 months, the stock has delivered a 4.44% return to shareholders, as of the close of April 12.
In the fourth quarter of 2022, Cogent Communications Holdings, Inc. (NASDAQ:CCOI) reported revenue of $152 million, which showed a 2.7% growth from the same period last year. For FYY, the company's operating cash flow came in at $173.7 million. During the year, it paid nearly $170 million in dividends to shareholders.
Cogent Communications Holdings, Inc. (NASDAQ:CCOI), one of the best dividend stocks, declared a 1.1% hike in its quarterly dividend to $0.925 per share on February 23. The company has been raising its dividends consistently for the past 41 quarters. The stock has a dividend yield of 5.34%, as of April 12.
At the end of December 2022, 18 hedge funds tracked by Insider Monkey reported having stakes in Cogent Communications Holdings, Inc. (NASDAQ:CCOI), up from 16 in the previous quarter. These stakes have a value of nearly $230.3 million collectively.
Telephone and Data Systems, Inc. (NYSE:TDS) is an Illinois-based telecommunications company that provides wireless products and services to its consumers. In February, Morgan Stanley maintained an Equal Weight rating on the stock with a $16 price target, highlighting the company's balance sheet and performance.
In Q4 2022, Telephone and Data Systems, Inc. (NYSE:TDS) generated $1.36 billion in revenue, which fell by 0.7% from the same period last year. The company's operating cash flow FY22 came in at $832 million, compared with $802 million in the prior-year period.
Telephone and Data Systems, Inc. (NYSE:TDS) is one of the best dividend stocks on our list as the company has been raising its dividends consistently for 48 years. The company offers a quarterly dividend of $0.185 per share and has a dividend yield of 6.66%, as of April 12. AT&T Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ), and Comcast Corporation (NASDAQ:CMCSA) are some other best dividend stocks in the telecom sector.
Of the 943 hedge funds tracked by Insider Monkey in Q4 2022, 20 funds owned stakes in Telephone and Data Systems, Inc. (NYSE:TDS), up from 13 in the previous quarter. The total value of these stakes is over $67.8 million. Among these elite funds, GAMCO Investors was the company’s leading stakeholder in Q4.
