While the telecommunications sector has been trailing the broader market, U.S. telecom exchange traded funds show promising dividends, attractive valuations and sturdy component holdings, says investment researcher Morningstar.
The U.S. telecommunications sector has become a mature industry, shedding the high leverage, weak profitability and uncertain growth that use to characterize the sector, writes Robert Goldsborough, ETF analyst at Morningstar.
The industry, led by giants like AT&T (NYSE: T) and Verizon (NYSE: VZ), is focusing on society’s move toward wireless gadgets and internet usage, which has boosted demand for smartphones and mobile broadband devices.
The sector has fallen behind the broader market so far this year, but the industry has remained on hold, at least until the AT&T and T-Mobile deal either goes through or breaks apart.