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Take advantage of the telecom boom with these stocks

Three of the ASX’s best telecommunications providers are ready to take advantage of the NBN and pay great dividends. If you thought it was too late to get yourself a great stock, think again. Here are three of best on the market today.

M2 Telecommunications (ASX: MTU)

M2 provides retail and business customers with services for both residential and business needs but isn’t relying on organic growth to provide a brighter upside for shareholders. Today, it announced that it purchased $2 million of shares in the IPO of Inabox Group, a wholesale telco that operates throughout Australia and has revenues of approximately $45 million.

This follows the purchases of Eftel, Dodo and Primus in the past three years, which ultimately lead to a 66% increase in NPAT for the first half of FY 2012. However, both organic growth and acquisitions should help M2 grow that figure even more in the next five years. Although it operates at a high current P/E, it will change as the company begins to earn more so investors shouldn’t read too much into the figure. It pays a healthy 3.1% dividend fully franked.

Telstra (ASX: TLS)

Despite Telstra’s enormous size and market dominance, it still manages to have a healthy upside. With a dividend of 6% and steadily increasing NPAT, the company is actively looking for growth opportunities outside the NBN but will stand to benefit the most when fibre networks are rolled out to customers around the country.

iiNet (ASX: IIN)

Although iiNet’s share price has gone through the roof in recent years, the mid-sized telco may prove to be the biggest internet service provider after Telstra. Currently, it has over 1.7 million Australian customers and, as a result, is continuously upping its NPAT each reporting season. Like M2, investors’ expectations are weighing in on the stock because of its potentially massive upside, but it seems well deserved.

Foolish takeaway

Buying stocks at the right price is important but buying good companies with long term potential is more so. If investors are in it for the long term, history has shown they can expect great returns on their investment and take dividends along the way.

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Motley Fool contributor Owen Raszkiewicz owns shares in M2 Telecommunications. 

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