Should We Buy Verizon Communications Inc. (VZ) and AT&T Inc. (T)?

In the meantime, AT&T also spits out a very nice and consistently growing 5.1% dividend. Like Verizon, it habitually buys millions of shares each quarter as well. With annual free cash flow in excess of $14 billion, investors should feel confident that the share buybacks and dividend increases will continue.

The Foolish conclusion:

Telecommunications is clearly here to stay, and will continue to grow. However, one must realize that the landscape is changing as more and more customers are switching from landlines to wireless phones. Only a certain few companies will benefit, while others will see business suffer. My take is that Verizon and AT&T will be those two beneficiaries. Meanwhile, many of the landlines are value traps, with artificially high dividend yields and massive debt loads that will be hard to service.

The article Should We Buy These 2 Telecom Companies? originally appeared on Fool.com and is written by Brian Gorban.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.