What Should You Consider Before Buying Stock in a Telecom Company?

What Should You Consider Before Buying Stock in a Telecom Company?

As originality of product offerings, technical superiority and quality of services are important determiners of success in the competitive telecommunications industry, prospective buyers should consider these factors before purchasing telecom stocks, advises Nasdaq. Investors should also check the stability of dividend yields, advises U.S. News & World Report.

Telecommunication company stocks are a good investment for investors seeking protection from a strengthening American dollar, advises U.S. News & World Report. This is because telecom companies derive virtually no income from outside the United States.

To avoid overpaying for telecom stocks, prospective investors should carefully consider the forward price-to-earnings ratio of a target stock, warns U.S. News & World Report.

Investors who are seeking to profit from the telecommunications industry but are wary of buying wireless carrier stock should consider investing in the American Tower Corporation, argues The Motley Fool. The company owns and operates the communication towers used by American wireless carriers. As the telecommunications industry grows, these carriers should require additional towers, boosting the fortunes of the American Tower Corporation.

Another factor that makes the company an attractive investment is its organization as a real estate investment trust, argues The Motley Fool. Such firms are legally required to distribute 90 percent of their pretax income as dividends or lose certain tax benefits. Combined with the company's positive prospects, this requirement arguably makes the American Tower Corporation a good source of consistent, reasonably high dividend yields for the foreseeable future.