When it comes to stocks that can offer both income and upside, the two biggest in the world Telecommunications companies There are interesting places to visit. Verizon Communications NYSE: VZ And AT&T NYSE: T Both have significant dividend yields of over 5%. In addition, both can provide the potential for capital appreciation. Based on average Wall Street price targets, both show the potential for significant fluctuations in their stock prices.
Unlike Verizon comes to more than 21%While AT&T’s sits at 17%Based on January 16 closing prices. If these figures hold true in 2025, the upside plus dividend will provide a much higher non-forfeitable return on the year. In 2024, AT&T was a company that delivered far and away a better combination of revenue and growth. The stock provided a total return of 44%. Verizon’s return was 13%. However, the question remains: Which company is the better buy for 2025 and beyond? I will compare the strategies of the two firms to give my answer to this question.
AT&T: Fiber-first focus
AT&T today
- 52-week range
- $15.94
▼
$24.03
- Dividend yield
- 4.98%
- P/E ratio
- 18.13
- Price target
- $25.83
Both company’s strategies are primarily focused on investing in their wireless and broadband capabilities. Wireless means mobile phone coverage. Broadband means internet connection for homes and buildings. Both have invested in 5G for their wireless business. AT&T’s wireless services revenue was $16.5 billion in the previous quarter.
The main difference between the two comes in their broadband strategies. AT&T’s strategy revolves largely around fiber-optic connectivity. It is now 9 million fiber-optic customers. It also has a much smaller fixed wireless business, called AT&T Internet Air, with about 500,000 subscribers. The difference is that fiber uses cables to connect to buildings. Fixed wireless internet uses towers to send signals.
AT&T stock forecast today
$25.83
Up 15.87%buy medium
Based on 23 analyst ratings
| High forecast | $30.00 |
|---|---|
| Average forecast | $25.83 |
| Less predictable | $18.00 |
The company’s clear preference for fiber, based on the size of the customer base, is due to two beliefs about the future. First, the company sees demand for high-performance broadband connectivity growing rapidly. As data transmission increases, fiber’s faster speeds and lower latency will make it a preferred choice for users over fixed wireless.
Second, AT&T sees fiber as the future backbone where broadband and wireless networks converge. In this reality, cell towers and buildings are all connected by fiber. It can maximize both broadband and wireless speeds. It also reduces long-term operational costs and makes it easier to upgrade after the initial fiber cables are laid. Over the past few years, AT&T has seen increasing success in converging its wireless and fiber customers. Now, 40% of fiber customers are also wireless customers.
Verizon: Large wireless and fixed wireless business
Verizon Communications Today
- 52-week range
- $37.58
▼
$45.36
- Dividend yield
- 6.97%
- P/E ratio
- 16.75
- Price target
- $46.54
Verizon is investing heavily in 5G for wireless, and its wireless service revenue last quarter was about $20 billion.
In broadband, it has opted for a more mixed approach between fiber and fixed wireless.
The company has 7.1 million fiber connections. This Also announced recently It will gain Frontier communication parents NASDAQ: FYBR.
Verizon Communications stock forecast today
$46.54
Up 19.78%catch up
Based on 17 analyst ratings
| High forecast | $55.00 |
|---|---|
| Average forecast | $46.54 |
| Less predictable | $39.00 |
Together, they have about 10 million fiber subscribers and about 25 million fiber passes. Passing refers to buildings that sit along fiber network routes and can be connected. Essentially, it shows the total potential fiber customers based on the cable currently laid. AT&T has 29 million fiber passes. Analysts expect the Frontier deal to not close for more than a year.
Verizon also has 4.2 million fixed wireless customers. Overall, it was received 396,000 broadband customers in the last quartercompared to AT&T’s 28,000. However, the 226K fiber adds were five times more than Verizon’s 43,000. Both companies are losing a lot of digital subscriber line (DSL) customers. This explains the gap in total broadband and fiber additions.
Verizon and AT&T: Not mutually exclusive
Overall, there are things to like about both AT&T and Verizon. Verizon generates about $3 billion more in revenue a year, while AT&T is generating a little less than $2 billion more in free cash flow. Value the firms roughly the same, with about $160 billion in market capitalization. AT&T’s forward price-to-earnings (P/E) ratio is about 23% higher than Verizon’s. Verizon’s 7% dividend yield is significantly higher than AT&T’s 5% yield.
AT&T’s long-term fiber strategy is doing significantly better than Verizon’s, but Verizon also has a much larger fixed wireless business. Its overall broadband strategy is also growing rapidly. In my view, both companies look like good options for revenue and growth. An allocation to both can allow capitalization on various trends and changes in market sentiment. Between these two telecom giants, it doesn’t have to be one or the other.
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