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Verizon Or AT&T: Which Is The Better Dividend Bet?

Telecom stocks have always found favor with investors seeking high dividend yields, as they are relatively defensive companies with stable and predictable cash flows, and also because they reinvest a lower proportion of earnings back into the business compared to companies in many other sectors. For instance, the S&P 500 currently offers a dividend yield of about 2.1%, while telecom bellwethers AT&T and Verizon offer yields that are more than double that. Below, we compare the dividend yields of AT&T and Verizon, two of the biggest wireless names.

While AT&T offers a higher dividend yield compared to Verizon, its dividend growth rate over the last 5 years has been slower. Moreover, AT&T's dividend stems from a higher payout ratio (79% vs 53% for Verizon), implying that Verizon has more funds to reinvest and drive further growth, in addition to providing better dividend coverage. Verizon also has a more loyal postpaid wireless phone subscriber base, with churn levels remaining at under 1% for 2015, allowing for more stable revenues. That said, AT&T has a longer history of raising its dividends, with 32 years of consecutive growth compared to Verizon's 11 years of dividend growth.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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