One of the main keys to a civilized society is the ability to communicate. And today, there are more ways than ever to achieve this.
So how about putting your investment dollars to work in the communication sector of the stock market?
Understanding the communications industry
According to the widely used Global Industry Classification Standard (GICS), the communications sector includes companies that provide wireless or diversified telecommunications services or operate in the media, entertainment, and media and services sub-industries. interactive.
Best communication stocks to buy
There are thousands intriguing communication industry values to choose from, but these five communication values speak to me more than the others:
This subscription video streaming service has come a long way since its genesis as a DVD shipping platform over two decades ago. Today Netflix (NFLX) – Get a free report has over 223 million paid subscriptions worldwide. Faced with increased competition and rising content costs, Netflix has also begun rolling out a new, cheaper ($6.99/month) ad-supported service tier that is expected to boost retention and increase memberships.
With nearly 143 million wireless customers, a steadily growing broadband business, and a jaw-dropping dividend currently yielding 7% annually, Verizon (VZ) – Get a free report is an excellent option in the communication sector for investors seeking income. Verizon has increased its dividend every year since 2007, but the payout still represents more than half of its annual free cash flow last year. Going forward, Verizon should have no trouble increasing its dividend even further by continuing to invest heavily in its network infrastructure.
Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG)
As Google’s parent company, Alphabet (GOOGL) – Get a free report offers nine products that each have at least one billion users: Android, Chrome, Gmail, Google Drive, Google Search, Google Maps, the Google Play Store, YouTube and Google Photos.
The internet giant generates the vast majority of its revenue – about $54.5 billion of last quarter’s $69 billion – from advertising on many of the products mentioned above. But it also saw strong growth in its high-margin Google Cloud services segment. Additionally, Alphabet is consistently embracing advanced AI and new monetization avenues (most recently with the YouTube Shorts short video format) to increase sales and profits.
Walt Disney Co. (NYSE: DIS)
Arguably best known for its namesake movie studios, theme parks and cruise lines, Disney (SAY) – Get a free report is much more than the “House of Mouse” today. The company owns ABC and majority stakes in Hulu and ESPN. It has also proven to be a savvy acquirer thanks to its purchases of Pixar ($7.4 billion in 2006), Marvel ($4 billion in 2009), Lucasfilm ($4 billion in 2012) and 21st Century Fox ( more than $71 billion in 2019, before several billion in disposals). Today, Disney brings it all together through its subscription streaming services Disney+, ESPN+, and Hulu, which collectively had more than 221 million members as of July 2022.
T-Mobile USA (NASDAQ: TMUS)
Following its merger with Sprint in mid-2020, T-Mobile (TMUS) – Get a free report effectively jumped into the position of the second largest wireless carrier in the United States (behind only Verizon). More than 110 million wireless subscribers now benefit from what the company describes as the largest 5G network in the United States. T-Mobile also benefits from a steadily growing base of more than 2.1 million high-speed Internet customers. Additionally, it is reportedly exploring joint venture or business partnership options to build its fiber optic network targeting the lucrative home broadband market.
Advantages of investing in communication stocks
Wireless and telecommunications companies provide essential services in our daily lives. These services generate consistent revenue and profit and are unlikely to experience high churn.
The media and entertainment sector of the communications sector has shown remarkable resilience and flexibility, even in the face of macroeconomic headwinds and a global pandemic. For example, as Disney temporarily closed its parks, the company focused on adding tens of millions of new subscribers to its budding Disney+ service.
Risks of investing in communication actions
The communications sector tends to be capital intensive due to the costs of content generation and data centers in the media industry and investments in network infrastructure on the wireless and telecommunications side.
So, as leaders in the communications industry become larger and more dominant, they are also increasingly at risk of falling into the crosshairs of antitrust regulators. For example, Alphabet has faced numerous multibillion-dollar fines for alleged antitrust violations in recent years, and the T-Mobile/Sprint and Disney/Fox mergers have come under scrutiny. from government regulators.
The communications industry covers a wide range of businesses, from wireless services and telecommunications to leaders in media and entertainment. And the best of these consumer-focused companies have proven time and time again to be effective creators of long-term shareholder value.