4 High-Yield Telecom Stocks To Cushion Your Portfolio

Telecommunications is a necessary utility and its need in both rural and urban areas as well as its role in the infrastructural development of an economy is of utmost importance. The U.S. telecom industry has developed into an intensely contested space where success largely depends on technical superiority, quality of services and scalability.

Thus, in order to stay abreast, existing players need to introduce innovative products or merge with other companies despite strict vigil by regulator Federal Communications Commission (FCC).

Momentum to Continue

The U.S. telecommunications industry is presently riding the growth trajectory and the momentum is likely to continue in 2015 as well. Telecommunications is one of the few industries to have seen rapid technological improvement even during recession. Owing to the significance of telecommunications as an infrastructure product, we expect the overall economic dynamics to shift in the industry’s favor.

The rising demand for technologically superior products has been the silver lining for the telecommunication industry in an otherwise tough environment. Uninterrupted advancement in telecom technologies has helped telecom operators to adopt newer business models in order to boost revenues. These include new pricing plans, a shift from unlimited data to tier-based data usage plans, and higher upgrade fees for smartphones and tablets.

In fact, the average revenue per user (ARPU) for most telecom carriers has been on the rise over the last two years. It is also expected to grow over the long term on the back of massive growth in mobile data usage.

Our Choices

While the telecom growth momentum is expected to be maintained in the U.S. over the near term, the major impetus is likely to come from the emerging markets of Asia-Pacific and the Latin American region. At this stage, we believe investors should choose stocks which promise strong dividend yield and carry a favorable Zacks Rank to cash in on future growth.

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