When it comes to stocks that can offer both income and growth potential, two of the world’s largest telecommunications companies are interesting places to look. Verizon Communications New York Stock Exchange: ВЗ and AT&T New York Stock Exchange: T both have substantial dividend yields exceeding 5%. Additionally, both can provide potential for capital growth. Based on Wall Street’s average price targets, both companies show significant upside potential for their stock prices.
Verizon’s stock has an estimated upside of more than 21%, while AT&T’s has an estimated upside of 17%, based on January 16 closing prices. If these numbers pan out in 2025, the growth potential plus the dividend would provide a not-so-bad annual return. In 2024, AT&T was a company that undoubtedly delivered a superior combination of revenue and growth. The stock provided a total return of 44%. Verizon’s yield was 13%. However, the question remains: which company is the best one to buy in 2025 and beyond? I will compare the strategies of the two firms to give my opinion on this issue.
AT&T: Focus on Fiber Optic
AT&T today
AT&T
- 52 week range
- US$15.94
▼
$24.03
- Dividend yield
- 4.98%
- P/E ratio
- 18.13
- Target price
- $25.83
Both companies’ strategies primarily focus on investing in wireless and broadband capabilities. Wireless refers to mobile phone coverage. Broadband means connecting homes and buildings to the Internet. Both have invested in 5G for their wireless businesses. AT&T’s wireless services revenue was $16.5 billion last quarter.
The main difference between them is their broadband strategies. AT&T’s strategy largely revolves around fiber optic communications. The company now has 9 million fiber optic customers. The company also has a much smaller fixed wireless business known as AT&T Internet Air, with about 500,000 subscribers. The difference is that cables are used to connect to buildings. Fixed wireless uses towers to send internet signals.
AT&T stock forecast for today
$25.83
Growth potential 15.87%Moderate purchase
Based on ratings from 23 analysts
| High forecast | US$30.00 |
|---|---|
| Average forecast | $25.83 |
| Low forecast | US$18.00 |
AT&T Stock Forecast Details
The company’s clear preference for fiber, based on the size of its customer base, is driven by two beliefs about the future. First, the company sees demand for high-performance broadband growing rapidly. As data speeds increase, fiber’s higher speeds and lower latency will make it the preferred choice for users over fixed wireless.
Second, AT&T sees fiber as the foundation of a future in which broadband and wireless networks will compete. In this reality, cell towers and buildings are connected to fiber optics. This can maximize both broadband and wireless speeds. This also reduces long-term operating costs and makes it easier to upgrade after the initial fiber optic cables have been installed. Over the past few years, AT&T has had growing success in connecting its wireless and fiber customers. Now 40% of fiber customers are also wireless customers.
Verizon: Major Wireless and Fixed Wireless Enterprises
Verizon Communications today
Verizon Communications
- 52 week range
- $37.58
▼
$45.36
- Dividend yield
- 6.97%
- P/E ratio
- 16.75
- Target price
- $46.54
Verizon is investing heavily in 5G wireless, and its wireless service revenue was nearly $20 billion last quarter.
In broadband, the company has taken a more hybrid approach between fiber and fixed wireless.
The company has 7.1 million fiber connections. The company also recently announced the acquisition of Frontier Communications Parent. NASDAQ:UBR.
Verizon Communications stock forecast for today
$46.54
Growth potential 19.78%Hold
Based on ratings from 17 analysts
| High forecast | $55.00 |
|---|---|
| Average forecast | $46.54 |
| Low forecast | $39.00 |
Verizon Communications Stock Forecast Details
Collectively, they have about 10 million fiber customers and about 25 million fiber passes. Crossovers refer to buildings that are located along fiber optic network routes and can be interconnected. Essentially, it shows the total number of potential fiber customers based on the cable currently installed. AT&T’s fiber pass count is 29 million. Analysts expect the deal with Frontier to close in at least a year.
Verizon also has 4.2 million fixed wireless customers. Overall, the company added 396,000 broadband customers last quarter, compared with AT&T’s 28,000. However, the 226K fiber additions were more than five times higher than Verizon’s 43K. Both companies are losing a lot of digital subscriber line (DSL) customers. This explains the gap in overall broadband and fiber adoption.
Verizon and AT&T: Not mutually exclusive
Overall, there’s a lot to like about both AT&T and Verizon. Verizon generates about $3 billion more in revenue per year, while AT&T generates just under $2 billion in free cash flow. The markets value these companies almost identically, with a market capitalization of about $160 billion. AT&T’s forward price-to-earnings (P/E) ratio is about 23% higher than Verizon’s. Verizon’s 7% dividend yield is substantially higher than AT&T’s 5%.
AT&T’s long-term fiber strategy is performing significantly better than Verizon’s, but Verizon also has a much larger fixed wireless business. The overall broadband strategy is also moving much faster. In my opinion, both companies look like good options for earnings and growth potential. Bilateral allocations can allow you to benefit from various trends and changes in market sentiment. Between these two telecom giants, it doesn’t have to be one or the other.
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