The Coca-Cola Company (KO), AT&T Inc. (T): How To Invest Despite Long-Tail Risk, Part I

AT&T and Verizon

AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ) basically have a duopoly in the U.S. cell phone space. That’s been an enviable position to be in as consumers have embraced cell phones. The big adoption push is over, however. That’s good news since both companies have established market positions that they aren’t likely to lose anytime soon.

The new thing is increased data usage. Customers are getting more and more accustomed to accessing services “on the go” that use notable bandwidth, such as video and music streaming. This should push up the revenues that both companies earn. However, it will also require increased attention to service quality.

While they aren’t exactly interchangeable, the similarities between AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ) are material. That said, AT&T’s recent yield of around 4.7% is more enticing than Verizon’s 4.2%. Both are likely to see slow, but stable top line growth in the years ahead.

Note that AT&T has a long history of regular annual dividend increases, while Verizon’s history is a bit more spotty. With betas well less than half of the market’s, either would be a good option to reduce overall risk. That said, those looking for a consistent dividend policy should favor AT&T Inc. (NYSE:T).

Long Tails

These four companies are all industry leaders with great businesses. Investors who want to be in the market, but still protect themselves on the downside, should carefully consider each one.

The article How To Invest Despite Long-Tail Risk Part 1 originally appeared on Fool.com and is written by Reuben Brewer.

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