Which telecom should you own?

With so many telecoms on the market, which one is right for you?

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

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

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »