Credit: Shutterstock photoTelecommunications exchange traded funds have enjoyed a strong run this year as income-oriented investors turned to the the attractive dividend-paying sector.
The U.S. telecom industry is changing. Consumers are exchanging traditional land lines for cellphones. Cable providers are muscling in on the telecom space, expanding internet access and phone coverage.
Related: 46 Tech ETFs to Tap Into Big Growth Names
"More cable consolidation is occurring," writes Morningstar analyst Robert Goldsborough. "And big cable companies are boosting network quality and trying to take market share from telecom rivals in the less attractive residential fixed-line portion of the market."
Nevertheless, Goldsborough argues that fixed-line telecom service remains a stable revenue source for now.
Trending on ETF Trends
Bears Singe Solar ETF - First Solar, Solar City
Philippines ETF Rallies on Duterte Presidential Win
ETF TMI: 2 Themed ETFs Launch; Energy, MLPs Active
Dividend ETFs That Bark Pfizer, Johnson & Johnson, AT&T
Bears Look to Feast on These 8 Energy ETFs
Looking ahead, growth may come through greater consolidation. For instance, AT&T ( T ) has been acquiring stakes in satellite TV while Verizon ( VZ ) has expanded into mobile advertising platforms.
Currently, in a uneven market where raw materials-related sectors are underperforming in a depressed commodities environment, the telecom space has stood out as a positive driver of market earnings. Telecom services are seen as one of the few ares of positive earnings growth.
Related: The Rise of Themed ETFs: Video Games, Drones, Millennials
Moreover, the industry has offered attractive dividend yields, which has helped attract value investors in a year where many are shunning the growth category. For instance, the Vanguard Telecommunication Services ETF (NYSEArca: VOX ), the largest telecom-related ETF, comes with a 3.76% 12-month yield and rose 9.9% year-to-date, whereas the broader S&P 500 gained 1.4% so far this year.
Investors who are interested in tracking the telecommunications services sector have a handful of related ETF options to choose from.
Telecom ETFs:
1. Vanguard Telecommunication Services ETF (NYSEArca: VOX )
Top 10 Holdings - 69.65% of Total Assets:
2. iShares U.S. Telecommunications ETF (NYSEArca: IYZ )
Top 10 Holdings - 59.94% of Total Assets:
3. iShares Global Telecomm ETF (NYSEArca: IXP )
Top 10 Holdings - 71.22% of Total Assets:
4. Fidelity MSCI Telecommunication Services Index ETF (NYSEArca: FCOM )
Top 10 Holdings - 67.9% of Total Assets:
5. SPDR S&P International Telecommunications Sector ETF (NYSEArca: IST )
Top 10 Holdings - 59.4% of Total Assets:
6. SPDR S&P Telecom ETF (NYSEArca: XTL )
Top 10 Holdings - 24.46% of Total Assets:
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
This article was provided by our partner Tom Lydon of etftrends.com.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
