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Wireless carriers are the new “widow and orphan” stocks (CHL, CEL & SKM)

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Wireless carriers such as SK Telecom ( SKM , quote ), Cellcom Israel ( CEL , quote ) and China Mobile ( CHL , quote ) are now replacing utilities as the "widows and orphans" stocks that provide stability and dividend income.

U.S. utilities have struggled over the last few years, but the numbers of cell phone subscribers in the emerging world increased over that period. Wireless carriers have replaced utilities as being indispensable in retail portfolios.

In many areas in emerging markets, the phone company is carried in the palm of the hand. Banking and other activities are also transacted over mobile phones. Advertising over mobile phones is now the hot field in an industry looking for ways to boost revenue.

Emerging carriers like SK Telecom ( SK , quote ), Cellcom Israel ( CEL , quote ) and China Mobile ( CHL , quote ) also pay higher dividends than many utilities.

Another appealing feature for investors is that wireless carriers do not always have the traditional high debt load associated with utility companies. The cost of fuel does not affect a wireless carrier as it does a utility.

While barriers to entry are not as significant as they are for utilities, government regulations and infrastructure can prove to be just as imposing.

The new role of China Mobile (CHL), SK Telecom (SKM) and Cellcom Israel (CEL) in global portfolios is evinced by the high levels of institutional ownership and the prominent position in the holdings of so many exchange-traded funds.

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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