Demand for smartphones is stronger than ever, and is not showing any signs slowing. Telecom companies and smartphone manufacturers are benefiting, while mutual fund companies and trading firms wish consumers had greater awareness on the cost of paying for smartphone services. A service plan that costs $100 per month for 30 years at 6% interest is equivalent to a $100,000 in an IRA.
Rising demand for faster and bigger amounts of wireless data will continue, as consumers view videos on the phone, check status updates on Facebook (FB), and play games. Demand for Apple’s (AAPL) iPhone 5 will exceed supply, thanks to a shortage. The demand means that Apple can demand a high price from carriers. Carriers then subsidize the cost of the phone, but pass the rest of the cost to the consumer.
Investors should look at telecom companies paying dividends benefiting from the growing demand for wireless data access. The Labor Department reported that spending on phone services rose by over 4% compared to the previous year. Since the most important contacts on most users’ smartphone are family members, household spending on mobile plans rose steadily.
Business Section: Investing Ideas
1. Verizon Communications Inc. (VZ, Earnings, Analysts, Financials): Provides communication services. Market cap at $127.12B, most recent closing price at $44.62. Verizon revised its plans recently to improve margins. Consumers who wanted to upgrade their phones at a subsidized price would have to give up unlimited data plans. Verizon pays a dividend that yields 4.40%.
2. AT&T, Inc. (T, Earnings, Analysts, Financials): Provides telecommunication services to consumers, businesses, and other service providers worldwide. Market cap at $205.55B, most recent closing price at $35.63. AT&T is continuing 4G LTE expansion. The company now offers 4G LTE to new parts of the Dallas-Fort Worth area. AT&T pays a dividend that yields 4.70%.
3. Vodafone Group plc (VOD, Earnings, Analysts, Financials): Provides mobile communications in Europe, Africa, the Asia Pacific, the Middle East, and the United States. Market cap at $148.16B, most recent closing price at $28.15. This company pays a dividend that yields 6.80%.
4. China Mobile Limited (CHL, Earnings, Analysts, Financials): Provides mobile telecommunications and related services primarily in the Mainland China. Market cap at $218.2B, most recent closing price at $54.28. This company pays a dividend that yields 3.50%
5. TELUS Corporation (TU, Earnings, Analysts, Financials): Provides telecommunications products and services primarily in Canada. Market cap at $20.43B, most recent closing price at $62.71. Based in Western-Canada, Telus pays a dividend that yields 3.90%.
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- Verizon Communications Inc. (VZ, Chart, Download SEC Filings)
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- Vodafone Group plc (VOD, Chart, Download SEC Filings)
- China Mobile Limited (CHL, Chart, Download SEC Filings)
- TELUS Corporation (TU, Chart, Download SEC Filings)
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