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In today’s economic uncertainty, telecom stocks can be a great addition to your portfolio due to their defensive properties. Defensive stocks are more resilient to market declines since they represent companies that provide essential services. These stocks are known to outperform the general stock market during recessions.
Aside from their defensive properties, the telecommunications sector is known for its superior dividend yields, which is why telecom stocks are popular among savvy investors.
Here are two telecom giants with yields above 8% to consider:
Vodafone Group
Vodafone Group PLC (NASDAQ:VOD) has a current dividend yield of 10.61%, compared to the industry average of 6.27%, but is the dividend yield sustainable?
Vodafone has made consistent payments since 1989. However, the amount paid has declined rapidly in recent years, with a five-year dividend growth rate of -10.99%. The high dividend yield paid today is therefore not the result of an increase but rather the consequence of a fall in share prices.
The company’s 202% payout ratio also indicates problems, as it is very likely that it is borrowing to pay dividends. Vodafone Group PLC is heavily leveraged, with a total debt to equity ratio (most recent quarter) of 97.57%.
Before our era
The other trending telecommunications stock is the Canadian telecom giant. BCE Inc. (NYSE:Before our era). This stock offers a current dividend yield of 8.61% and a payout ratio of 202.07%. BCE’s share price has fallen 18.34% over the past year as analysts sound the alarm over its high debt ratios.
The company has consistently paid quarterly dividends since 1983, with dividends increasing every quarter since 2015. However, this is not a good enough reason for income investors to buy the stock, as its fundamentals do not support future payouts.
While these telecom stocks may seem attractive due to their high dividend yields, investors should approach them with caution because their fundamentals suggest their dividends may not be sustainable in the long term.
There are better high yield opportunities
The current high interest rate environment has created an incredible opportunity for income-seeking investors to achieve massive returns, but not through dividend stocks… Some private market real estate investments give retail investors the opportunity to capitalize on these high yield markets. opportunities and Benzinga identified some of the most attractive options to consider.
For example, the investment platform backed by Jeff Bezos has just launched its Private credit fund, which provides access to a pool of short-term loans backed by residential real estate with a net annual return target of 7% to 9% paid monthly to investors. The best part? Unlike other private credit funds, this one has a minimum investment of just $100.
Don’t miss this opportunity to take advantage of high yield investments while rates are high. Check out Benzinga’s favorite high-yield deals.
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This item These 2 Popular Telecom Stocks Pay Dividend Yields Above 8%, But Are They Traps? originally appeared on Benzinga.com
