Which is the Better Play: AT&T (T) or Verizon (VZ)? Barron's Says...
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Price: $16.60 -1.25%
Overall Analyst Rating:
NEUTRAL (= Flat)
Dividend Yield: 6.5%
Revenue Growth %: -0.3%
Overall Analyst Rating:
NEUTRAL (= Flat)
Dividend Yield: 6.5%
Revenue Growth %: -0.3%
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AT&T (NYSE: T) and Verizion Communications (NYSE: VZ) have been the Hatfields and McCoys of the U.S. telecommunications industry for as long as anyone can remember. (Or as long as anyone cares to, we reckon).
But, which one will win over the hearts of investors? Both carry the Apple (Nasdaq: AAPL) iPhone, both have a large subscriber base and improving wireless metrics. Both offer TV services in FiOS at Verizon and U-Verse with AT&T.
Well, Barron's has formed an answer, opting for AT&T over Verizon.
Barron's says AT&T is cheaper than Verizon at 14 times earnings, has a solid dividend yield, firm cash flow of $4 billion, and at least a comparable long-term growth outlook. AT&T is also buying back stock from a $9 billion authorization announced earlier in the year.
In terms of potential moving forward, AT&T has good growth potential. In addition to expected dividend increases, one analysts notes that 88 percent of smartphone subs are family and business plans, a more stable base than individual subs, which leads to lower churn rates. The analyst also noted that fear behind consolidation in the wireline industry and churn expectations are at or near bottoms. Data suggests that most people are sticking with either Verizon or AT&T, as plans and network coverage have now become comparable enough that it wouldn't make much more sense to join the other carrier.
With the apparent formation of a duopoly in the U.S., both AT&T and Verizon might start to see margins expand, leading to better earnings numbers and happier investors.
AT&T has made big strides in upgrading its wireless network to the next-generation standard, something it was prodded for by Verizon just a few years ago. This bodes well for the company, with more and more high-margin data being consumer by subs via tablets and smartphones. The more reliable the network, the more likely subs are to stick with the carrier.
In addition, AT&T boasts one of the largest high-speed Internet base, with at least half of wireline subs signing up for the service.
Risks include Sprint (NYSE: S), which also recently got access to sell the iPhone, as well as spectrum capacity, which has been an issue for the carriers as of late. AT&T recently lost a bid to acquire T-Mobile and is now searching to acquire or lease spectrum in the U.S. from other carriers and equipment makers.
However, others are in the same boat. With a robust 5 percent dividend yield, large buybacks, and a steadfast customer base, AT&T appears to be one investors might want to dial-up when looking for strong returns.
Shares are fractionally lower Friday morning.
But, which one will win over the hearts of investors? Both carry the Apple (Nasdaq: AAPL) iPhone, both have a large subscriber base and improving wireless metrics. Both offer TV services in FiOS at Verizon and U-Verse with AT&T.
Well, Barron's has formed an answer, opting for AT&T over Verizon.
Barron's says AT&T is cheaper than Verizon at 14 times earnings, has a solid dividend yield, firm cash flow of $4 billion, and at least a comparable long-term growth outlook. AT&T is also buying back stock from a $9 billion authorization announced earlier in the year.
In terms of potential moving forward, AT&T has good growth potential. In addition to expected dividend increases, one analysts notes that 88 percent of smartphone subs are family and business plans, a more stable base than individual subs, which leads to lower churn rates. The analyst also noted that fear behind consolidation in the wireline industry and churn expectations are at or near bottoms. Data suggests that most people are sticking with either Verizon or AT&T, as plans and network coverage have now become comparable enough that it wouldn't make much more sense to join the other carrier.
With the apparent formation of a duopoly in the U.S., both AT&T and Verizon might start to see margins expand, leading to better earnings numbers and happier investors.
AT&T has made big strides in upgrading its wireless network to the next-generation standard, something it was prodded for by Verizon just a few years ago. This bodes well for the company, with more and more high-margin data being consumer by subs via tablets and smartphones. The more reliable the network, the more likely subs are to stick with the carrier.
In addition, AT&T boasts one of the largest high-speed Internet base, with at least half of wireline subs signing up for the service.
Risks include Sprint (NYSE: S), which also recently got access to sell the iPhone, as well as spectrum capacity, which has been an issue for the carriers as of late. AT&T recently lost a bid to acquire T-Mobile and is now searching to acquire or lease spectrum in the U.S. from other carriers and equipment makers.
However, others are in the same boat. With a robust 5 percent dividend yield, large buybacks, and a steadfast customer base, AT&T appears to be one investors might want to dial-up when looking for strong returns.
Shares are fractionally lower Friday morning.
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