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Which telecom should you own?

Telecommunication and technology stocks are hot topics. With strong dividends and growing profits, they’re definitely worthy of a spot on watch lists, but which one is right for you?

If you’re a more conservative investor who likes modest gains with few surprises and downside risks, then you should look no further than Telstra (ASX: TLS). Telstra epitomises what a core stock should be. It has strong dividends, a well-known brand and is likely to growth modestly in coming years. Although it has risen spectacularly in the past two years, Telstra still has some exciting growth areas including its National Application Services, eHealth and International businesses.

As history has proven, however, capital gains and dividends are a recipe for investing success. There are Australian telecommunications companies that offer both. M2 Telecommunications (ASX: MTU) owns popular household names like Dodo and Primus, but also offers small business solutions under brands such as Commander and M2 Wholesale. TPG Telecom (ASX: TPM) is another stock that has outperformed the market in spectacular fashion over the past two years and pays a strong, fully franked dividend.

Despite the huge rise those three companies have experienced in the past two years, one company has gone twice as high in half the time. Hutchison Telecommunications Australia (ASX: HTA) is the part-owner of Vodafone. In the past two years, its ability to lose customers has been unrivaled. Unreliable network coverage and services resulted in the loss of hundreds of thousands of customers.

However, investors must now believe it’s turned a corner. Its share price has risen an incredible 211% since May this year but could go higher as the company begins to restore both investors’ and customers’ faith in the brand. It does not pay a dividend.

Foolish takeaway

From shaky high risk companies to ‘safe’ corporations, the Australian stock market has a plethora of telecommunications companies to suit every investor. Many offer strong dividends and room for growth so perhaps it’s time you started getting in on the action.

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Motley Fool contributor Owen Raskiewicz does not have a financial interest in any of the mentioned companies.    

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