Telecommunications exchange traded funds have enjoyed a strong run this year as income-oriented investors turned to the the attractive dividend-paying sector.
The U.S. telecom industry is changing. Consumers are exchanging traditional land lines for cellphones. Cable providers are muscling in on the telecom space, expanding internet access and phone coverage.
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“More cable consolidation is occurring,” writes Morningstar analyst Robert Goldsborough. “And big cable companies are boosting network quality and trying to take market share from telecom rivals in the less attractive residential fixed-line portion of the market.”
Nevertheless, Goldsborough argues that fixed-line telecom service remains a stable revenue source for now.
[related_stories]Looking ahead, growth may come through greater consolidation. For instance, AT&T (NYSE: T) has been acquiring stakes in satellite TV while Verizon (NYSE: VZ) has expanded into mobile advertising platforms.
Currently, in a uneven market where raw materials-related sectors are underperforming in a depressed commodities environment, the telecom space has stood out as a positive driver of market earnings. Telecom services are seen as one of the few ares of positive earnings growth.
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Moreover, the industry has offered attractive dividend yields, which has helped attract value investors in a year where many are shunning the growth category. For instance, the Vanguard Telecommunication Services ETF (NYSEArca: VOX), the largest telecom-related ETF, comes with a 3.76% 12-month yield and rose 9.9% year-to-date, whereas the broader S&P 500 gained 1.4% so far this year.
Investors who are interested in tracking the telecommunications services sector have a handful of related ETF options to choose from.
Telecom ETFs:
1. Vanguard Telecommunication Services ETF (NYSEArca: VOX)
Top 10 Holdings – 69.65% of Total Assets:
| Verizon Communications Inc. Com | VZ | 22.42 |
| AT&T Inc. | T | 22.37 |
| CenturyLink, Inc. Common Stock | CTL | 4.58 |
| Level 3 Communications, Inc. Co | LVLT | 4.36 |
| SBA Communications Corporation | SBAC | 3.72 |
| T-Mobile US, Inc. | TMUS | 3.50 |
| Frontier Communications Corpora | FTR | 2.63 |
| Telephone and Data Systems, Inc | TDS | 2.11 |
| Sprint Corporation Common Stock | S | 2.04 |
| ORBCOMM Inc. | ORBC | 1.92 |
2. iShares U.S. Telecommunications ETF (NYSEArca: IYZ)
Top 10 Holdings – 59.94% of Total Assets:
| AT&T Inc. | T | 10.67 |
| Verizon Communications Inc. Com | VZ | 9.95 |
| SBA Communications Corporation | SBAC | 5.87 |
| Level 3 Communications, Inc. Co | LVLT | 5.67 |
| CenturyLink, Inc. Common Stock | CTL | 5.62 |
| T-Mobile US, Inc. | TMUS | 5.27 |
| Frontier Communications Corpora | FTR | 4.84 |
| Ruckus Wireless, Inc. Common St | RKUS | 4.10 |
| Telephone and Data Systems, Inc | TDS | 4.02 |
| Shenandoah Telecommunications C | SHEN | 3.53 |
3. iShares Global Telecomm ETF (NYSEArca: IXP)
Top 10 Holdings – 71.22% of Total Assets:
| AT&T Inc. | T | 18.40 |
| Verizon Communications Inc. Com | VZ | 15.99 |
| Vodafone Group PLC | VODPF.L | 6.56 |
| CHINA MOBILE HONG KO | CHLKF | 4.88 |
| NIPPON TEL & TEL CP | NPPXF | 4.48 |
| BT Group PLC | BTGOF.L | 4.39 |
| Deutsche Telekom AG | DTEGF.DE | 4.29 |
| KDDI CORP | KDDIF | 4.24 |
| SOFTBANK CORP ORD | SFTBF | 4.14 |
| Telstra Corp Ltd | TTRAF.AX | 3.85 |
4. Fidelity MSCI Telecommunication Services Index ETF (NYSEArca: FCOM)
Top 10 Holdings – 67.9% of Total Assets:
| AT&T Inc. | T | 22.00 |
| Verizon Communications Inc. Com | VZ | 20.95 |
| CenturyLink, Inc. Common Stock | CTL | 4.41 |
| Level 3 Communications, Inc. Co | LVLT | 4.23 |
| SBA Communications Corporation | SBAC | 3.69 |
| T-Mobile US, Inc. | TMUS | 3.37 |
| Straight Path Communications In | STRP | 2.61 |
| Frontier Communications Corpora | FTR | 2.49 |
| Globalstar, Inc. Common Stock | GSAT | 2.13 |
| pdvWireless, Inc. | PDVW | 2.02 |
5. SPDR S&P International Telecommunications Sector ETF (NYSEArca: IST)
Top 10 Holdings – 59.4% of Total Assets:
| Vodafone Group PLC | VODPF.L | 9.92 |
| Deutsche Telekom AG | DTEGF.DE | 6.37 |
| BT Group PLC | BTGOF.L | 6.30 |
| KDDI CORP | KDDIF | 6.27 |
| SOFTBANK CORP ORD | SFTBF | 6.22 |
| Telefonica SA | TEFOF.BC | 5.76 |
| NIPPON TEL & TEL CP | NPPXF | 4.95 |
| NTT DOCOMO INC ORD | NTDMF | 4.92 |
| Orange SA | FNCTF.PA | 4.52 |
| Singapore Telecommunications Ltd | SNGNF.SI | 4.17 |
6. SPDR S&P Telecom ETF (NYSEArca: XTL)
Top 10 Holdings – 24.46% of Total Assets:
| CommScope Holding Company, Inc. | COMM | 2.56 |
| NetScout Systems, Inc. | NTCT | 2.49 |
| Ubiquiti Networks, Inc. | UBNT | 2.48 |
| SBA Communications Corporation | SBAC | 2.47 |
| Ruckus Wireless, Inc. Common St | RKUS | 2.44 |
| InterDigital, Inc. | IDCC | 2.44 |
| Arista Networks, Inc. Common St | ANET | 2.40 |
| NETGEAR, Inc. | NTGR | 2.40 |
| Telephone and Data Systems, Inc | TDS | 2.39 |
| Windstream Holdings, Inc. | WIN | 2.39 |