Telefonica S.A. (ADR) (TEF), Vodafone Group Plc (ADR) (VOD), America Movil SAB de CV (ADR) (AMX): Why Aren’t These Telecom Stocks Moving?

If you believe, as I do, that Telefonica will ultimately prevail in its merger and continue to expand in Europe, and if you also like its heavy exposure to Latin America, now is an excellent time to buy. It disposed of its dividend last year, causing its share price to plummet, and the company says dividend payments will resume in November.

America Movil SAB de CV (ADR) (NYSE:AMX) also doesn’t have much of a dividend yield (1.6%, even with a recent price drop). And in Germany, it’s between a rock and a hard place. If the Telefonica-KPN merger is blocked, it loses the benefits to its KPN holdings. If the merger goes through, its rival Telefonica benefits. I’d pass for now.

I believe that the Eurozone situation is going to resolve itself within two years and leave Germany in a strong position. If you agree, Deutsche Telekom is an excellent investment. Its 7% dividend (you read that right) will help tide you over until its stock price recovers from Eurozone turmoil. Remember, Deutsche Telekom owns T-Mobile (both the US and international versions), so even though it’s based in the Eurozone, its profits are less affected by Eurozone woes than by global trends.

Of all the stocks mentioned here, the comparatively small KPN’s fate is tied most to the fate of the deal. I wouldn’t take the risk, frankly. KPN pays no dividend, and has no plans to reinstate one in 2013 or 14. With the merger on hold for a similar time frame, pass on this company for now.

The article Why Aren’t These Telecom Stocks Moving? originally appeared on Fool.com and is written by John Bromels.

John Bromels has no position in any stocks mentioned. The Motley Fool recommends Vodafone. 

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