Thursday, October 20, 2011

6 Communications Services Stocks With Increasing Dividends

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."

When looking at the companies in the Communications Services sector it is a dichotomy of haves and have nots. 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.

Probably 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 does it plan to get there?

This week 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. (TDS)
Yield: 2.1% | Years of Dividend Growth: 36
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 (ATNI)
Yield: 2.6% | Years of Dividend Growth: 15
Atlantic Tele-Network provides wireless and wireline telecommunications services in the Caribbean and North America.

Shenandoah Telecommunications Co. (SHEN)
Yield: 2.6% | Years of Dividend Growth: 15
Shenandoah Telecommunications Company provides regulated and unregulated telecommunications services to end-user customers and other communications providers in the southeastern United States.

Verizon Communications Inc. (VZ)
Yield: 5.3% | Years of Dividend Growth: 7
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. (T)
Yield: 5.9% | Years of Dividend Growth: 28
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.

CenturyLink, Inc. (CTL)
Yield: 8.4% | Years of Dividend Growth: 37
CenturyLink, Inc. acquired larger telecom peer Qwest Communications in a stock deal in April 2011. Combined, the company provides voice service to 15 million customers and Internet service to 5 million customers in rural towns as well as larger cities. After seven straight quarters of declaring a flat dividend of $0.725, CTL is dangerously close to losing its position as a Dividend Aristocrat.

As with past screens, the data presented above is in its raw form. Some of the 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 210+ 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 VZ, T, CTL. See a list of all my dividend growth holdings here.

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