Best Telecom Stocks To Buy In May

Key Insights

• Investors continue to search for safe-haven assets amid broad market sell-off. 
• Telecom stocks offer solid dividend yields, which attract income-oriented investors. 
• Verizon and AT&T are trading at reasonable valuation levels, which provides additional support to these stocks.

While S&P 500 continues to fall, several telecom stocks have managed to find support amid demand for safer investments and reliable dividends. As a result, Verizon and AT&T managed to outperform the S&P 500 in 2022 and have a decent chance to continue the current trend.

Verizon

Verizon  stock found itself under material pressure in late April after the company released its first-quarter report. The report met analyst estimates, but investors focused on the company’s weaker guidance.

As a result, the stock dropped towards the $46 level. However, the company’s strong dividend provided sufficient support to the stock, which moved back towards the $50 level.

Currently, Verizon yields more than 5%, which makes the stock attractive for income-oriented investors. The safe dividend created enough demand for Verizon shares during the recent sell-off in the broader market, and this catalyst will likely continue to support Verizon in the upcoming weeks.

AT&T

AT&T stock has significantly outperformed S&P 500 this year. Investors bet that the company’s business will rebound after the recent problems, while the solid dividend yield of more than 5% provides additional support to the stock.

It should be noted that analyst estimates have been moving lower in recent months. Currently, analysts expect that AT&T will report earnings of $2.59 per share in the current year and $2.55 per share in the next year, so the stock is trading at 8 forward P/E.

Typically, declining earnings estimates serve as a bearish catalyst for the stock. However, a combination of an attractive dividend yield and cheap valuation has provided enough support to AT&T stock and pushed it to yearly highs.

To keep up with the latest earnings updates, visit our earnings calendar.