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International telecom stocks and exchange traded funds represent an option for yield-starved investors that are also looking to reduce their exposure to rising U.S. Treasury yields. That theme can be accessed with the iShares Global Telecomm ETF (NYSEArca: IXP).
“Large cap top tier telecoms are 46.667% of the fund with an average market cap of just over $77 billion. The average yield of the fund’s seven large cap holdings is 2.34%, with average dividend of $0.226 per share and average EPS of $2.46 per share. The very top tier of these telecom holdings tend to have a very high average debt to equity ratio. If the US Fed is able to carry out its plan to raise benchmark rates in 2016, some capital may move out of higher risk debt. As it stands now, the Fed seems to be taking very cautious steps, however it’s something the investor needs to be aware of. It will be more difficult to raise capital in the debt market should rates rise and companies are already well leveraged. Lastly, nearly 62% of institutional investors on the average hold these companies,” according to a Seeking Alpha analysis of IYZ.
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iShares U.S. Telecommunications ETF