2 High-Yield Stocks Get New Buy Ratings From Goldman – TradingView News

It’s a big year for the telecoms sector, even if that group is playing bridesmaid to everyone’s favorite artificial intelligence (AI) stock. But we’re witnessing a seismic shift in the telecoms industry, and some eye-popping numbers are backing that up. According to the latest GSMA data, global mobile operators are set to invest more than $1.5 trillion in their networks by the end of the decade. That’s $1 trillion with a “T”! Much of that cash is earmarked for 5G, showing just how serious these companies are about upgrading their networks to be next-gen compatible.

In another major event for the domestic telecommunications sector, Goldman Sachs GS I just started a bullish review of the group. Analyst James Schneider, Ph.D., notes that the U.S. telecommunications industry is entering a period where competition and capital intensity are moderating simultaneously for the first time in a decade. Goldman believes this favorable backdrop should fuel healthier growth and margin momentum, with the potential for significant capital returns and a revaluation of stocks across the sector.

As part of a broader review of the sector, Schneider also began analyzing two traditional players, AT&T T and Verizon W-Z CAKEgiving both stocks a “Buy” rating. That’s a pretty high-profile distinction for the pair, given Goldman Sachs’ influence on the market.

Even more enticing is that both AT&T and Verizon, true to their telecom roots, currently offer attractive dividend yields of around 6%. This makes them very attractive to investors looking for income-generating stocks.

#1 AT&T: High Dividend Yield and Strategic Investments

AT&T Inc. T is a leading international telecommunications company headquartered in Dallas, Texas. As the world’s third-largest telecommunications company by revenue and the second-largest wireless carrier in the U.S., AT&T offers a variety of services, including wireless communications, broadband Internet access, and digital entertainment.

AT&T, known for its high dividends, currently pays a quarterly dividend of $0.2775 per share, which translates to an annualized yield of about 5.90%, making it an attractive option for income investors.

T Company shares are up 11.3% year over year to hit a new 52-week high of $19.32 on Monday.

With a market capitalization of around $134 billion, AT&T has a strong position in the market, and the projected price-to-earnings ratio of 8.53 also seems quite reasonable.

A key development for AT&T is its $8 billion investment in FirstNet, a dedicated public safety communications network. This includes $6.3 billion for full 5G capabilities, expanded mission-critical services and expanded coverage. This strategic move not only strengthens AT&T’s position in the public safety sector, but also leverages 20 MHz of FirstNet’s 700 MHz spectrum, improving overall network capabilities.

In its first-quarter 2024 earnings report, AT&T reported earnings per share of $0.55, beating the consensus estimate of $0.53. The company reported revenue of $30.03 billion, slightly below the $30.62 billion expected but only down 0.4% year-over-year.

Looking ahead, AT&T’s next earnings release is scheduled for July 24, analysts are forecasting EPS of $0.58 and revenue estimates of around $29.99 billion. For the full year fiscal 2024, EPS estimates range from $2.28 to $2.54, with an average of $2.33.

Analyst opinion on AT&T is generally positive, with the consensus being a “Moderate Buy.” Of the 22 analysts, 12 recommend a “Strong Buy,” one suggests a “Moderate Buy,” and nine suggest a “Hold.” The average price target of $20.89 implies an expected upside of 11.8% from Wednesday’s close.

#2: Verizon Communications: Solid Performance and Strategic Expansions

Verizon Communications Inc. W-Z CAKE is a telecommunications powerhouse known for its wide range of wireless, internet and digital media services. It is a place where millions of people turn for reliable connectivity.

In terms of passive income, Verizon pays a quarterly dividend of $0.665 per share, for an annual payout of $2.66 per share. With a dividend yield of around 6.45%, it’s a favorite among income investors.

Verizon stock has had a solid run in 2024, up just over 9% year to date.

With a market cap of $173 billion, Verizon has an even larger reach than AT&T. With a P/E ratio of around 8.99, VZ is a relatively good buy at current levels and could be undervalued by around 29%.

On the strategic front, Verizon made some great moves. On June 28, the company announced that Caroline A. Litchfield, CFO of Merck & Co. MRKjoined the board, bringing valuable financial experience. Her extensive experience in corporate finance and strategic planning is expected to provide valuable insights as Verizon navigates a major transitional investment in its infrastructure.

And in a significant victory, the Department of the Navy (DON) has selected Verizon Public Sector to provide wireless devices and services through its Wireless and Telecommunications Services contract vehicle, known as Spiral 4. The contract, announced June 26, is worth up to $2.67 billion over 10 years. The contract will enable Verizon to provide voice, data, IoT and mobility management services to military personnel and federal civilian agencies.

In its Q1 2024 earnings report, the company reported earnings per share of $1.15, which beat the consensus estimate of $1.12. Revenue for the quarter was $32.98 billion, slightly below the $33.33 billion expected.

Looking ahead, Verizon’s next earnings release is scheduled for July 22. Analysts are forecasting Q2 EPS of $1.15, with revenue estimates of around $33.02 billion. For the full year fiscal 2024, EPS estimates range from $4.64 to $4.85, with an average of $4.73, and revenue forecasts of around $135.2 billion.

Analyst opinion on Verizon is quite bullish, with a consensus of “Moderate Buy” among the 22 surveyed. With an average price target of $44.92 suggesting a potential upside of 9.2%, 7 rate it a “Strong Buy,” 3 as a “Moderate Buy,” and 12 as a “Hold.”

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In summary, AT&T and Verizon have caught the attention of Goldman Sachs thanks to solid dividends and promising growth potential. Both stocks are riding high with new “Buy” ratings, thanks to strategic moves and strong market performance. With positive earnings reports and bullish analyst sentiment, these telecom giants look like great picks for anyone looking for reliable dividends and potential stock growth.

As of the date of publication, Ebube Jones did not have (directly or indirectly) a position in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. For more information, please see Barchart’s Disclosure Policy here.