The telecommunications industry includes a range of companies that provide residential and commercial communications solutions. It could be a good time to invest in the sector — operations have expanded in recent years. 

Check out our guide to learn more before you invest. We’ll also introduce you to some of the best telecommunications stocks worth watching. 

Overview: Telecommunications Stocks

At its root, any type of telecommunications system has 3 essential parts:

• A transmitter that receives information and converts it into a signal to travel over a long distance.
• A transmission medium or channel that carries the signal to its destination.
• A receiver that accepts the signal and converts it back into useful information for the receiving party.

The 1st type of telecommunication most investors think of is cellphones and 4G or 5G cellphone service. Cellphones do make up a major segment of the telecommunication market, but other products and services telecommunications companies offer include landline service, broadband internet services, cable television and satellite television.

Continued growth in the telecommunication industry makes it attractive for investors. Many telecommunications companies also offer hot stocks under $10 — a great choice if you’re a value investor.

Best Online Brokers for Telecommunications Stock

You need to open an account with a brokerage firm whether you’re searching for long-term telecommunications giants or looking to pick up a few stocks under $5. 

A broker is a person or company that you authorize to buy and sell assets on your behalf. You’ll need a broker before you can start choosing stocks and funds because the general public can’t buy or sell stocks directly.

Consider our top choices below when you’re ready to choose a broker. 

Advertisement

Features to Look for in Telecommunications Stock

Knowing how to evaluate telecommunications stocks can help you choose the right investments for your goals. Here are a few characteristics to look for when you begin.

• An earnings per share value that indicates the company is profitable: You can calculate a company’s earnings per share (EPS) value by dividing its current revenue minus dividends by the company’s current number of outstanding shares. Many telecommunications companies have huge operating expenses, so these types of companies may not show the sky-high annual profit that other companies do. Look for stocks with a positive EPS value — this indicates the company remains profitable.
• A safe dividend yield: Many investors look to the telecommunications industry for dividend payments to create a passive stream of income. While telecommunications corporations often offer dividends (that are sometimes quite high), you should only invest your money in companies that can sustain these dividends.

Don’t only look at the dollar amount the stock pays out per year or per quarter when you compare stocks. Instead, look at the company’s dividend yield. The dividend yield is calculated by dividing the company’s annual dividend by its current share price. Be wary of stocks that offer a dividend yield above 10%. This may indicate that a dividend cut is coming soon.

• A company that pays attention to shifting technology: Technology is shifting at a faster rate than ever before and consumers expect phone and internet providers to keep up. From investing in 5G technology to using satellite technology to expand television services to areas where cable television isn’t available, look for companies that focus on growing communications technology. 

Bolster Your Investments

Investing in telecommunications stocks can be a great way to shore up any stock portfolio. You’ll find great dividend potential and promising high-tech products. 

It’s important to remember that even large-cap telecommunication stocks aren’t risk-free investments. They should never make up the majority of your portfolio. Use telecommunication stocks to complement a larger portfolio of total market index funds, large-cap mutual funds and S&P 500 funds. 

The term “mid cap” stands for “middle capitalization.” Mid-cap stocks usually have a market capitalization between $2 billion and $10 billion. Mid-cap stocks can be beneficial because they have more potential for growth than large-cap stocks but are usually more transparent and stable than small-cap or micro-cap stocks.

Are you thinking about adding a few mid-cap stocks to your portfolio but aren’t sure which are worth your money? Our guide to mid-cap stocks will help you identify these stocks, evaluate their financials and choose which to invest in. We’ll also introduce you to a few mid-cap stocks that investors keep their eyes on for this year. 

Overview: Mid Cap Stocks

The “cap” in mid cap refers to a company’s total market capitalization. You can calculate a company’s market capitalization by multiplying the total number of outstanding shares of stock by the current share price. Most investors consider mid-cap stocks to have market capitalizations between $1 billion and $10 billion. 

Companies with market capitalizations below $1 billion are typically considered small-cap stocks, while companies with market capitalizations above $10 billion are usually referred to as large-cap stocks.

Mid-cap stocks offer a few benefits over large-cap and small-cap companies. Mid-cap stocks are established businesses, which makes them easier to find information on. This means that it’s much more difficult for mid-cap companies to fall into price manipulation schemes or to hide financial data. 

Mid-cap stocks are also small enough to show more year-after-year growth than large-cap stocks, which can make them a great choice for investors with limited funds and who want more potential for profit. The right mid-cap stocks add a level of diversification to your portfolio without the high level of risk that often accompanies small-cap and penny stocks. 

Best Online Brokers for Mid Cap Stocks

No matter if you’re looking for mid-cap stocks with the highest potential for growth or you’re only interested in stocks under $5 for short-term gains, you’ll need to place your buy and sell orders through a broker. If you don’t already have a brokerage account, consider a few of our favorite online brokers below. 

Advertisement

Features to Look for in Mid Cap Stock

Like large-cap stocks, it’s easy to find analysis and financial information on most mid-cap stocks. Look for these 3 essential characteristics before you invest.

• A history of yearly growth: Unlike large-cap stocks, mid-cap stocks have the potential to significantly grow their operations on a yearly or even monthly basis. When you search for mid-cap companies to invest in, look for ones that have a proven track record of growth.
• A positive earnings per share value: A company’s earnings per share (EPS) value is calculated by dividing the current revenue minus dividends by the total number of outstanding shares. A mid cap company might have some debt, especially for the first few years on the market. However, if a company has a positive EPS, it means that the debt is under control and the corporation is remaining profitable.
• A safe, sustainable dividend yield: If you’re investing to create a passive stream of income, you might turn to dividend-producing mid-cap stocks because they tend to be more affordable than their large-cap counterparts. While it can be tempting to shop for stocks only by their annual dollar payout, you should instead pay attention to the dividend yield.

A company’s dividend yield is equal to the current annual dividend divided by its current share price. A dividend yield above 10% may indicate that the dividend is unsustainable and may be cut in the near future. 

Adding Mid Cap Stocks to Your Portfolio

Mid-cap stocks can make an exciting addition to any portfolio. No matter if you’re ready to invest hundreds of dollars or you’re simply looking for mid-cap stocks under $10, remember that mid-cap stocks can be riskier than investing in large-cap stocks or total market index funds. 

If you do decide to add a few mid-cap stocks to your portfolio, try to search for stocks within a few different industries to limit your risk. 

Large-cap stocks are stocks issued by corporations that have major influence over the economy. The “cap” in large-cap refers to the company’s “market capitalization,” which is equal to the company’s current share price multiplied by its outstanding number of shares. As the name suggests, large-cap stocks have very high market capitalizations — most large-cap stocks have capitalizations well above $10 billion.

Though you won’t find many stocks under $5 when you shop for large-cap stocks, these stocks can add a layer of safety and stability to your profile. Our guide to large-cap stocks will help you understand a little more about what sets these companies apart from the rest. We’ll also introduce you to a few ideas when it comes to large-cap investment opportunities. 

Overview: Large Cap Stocks

A large-cap stock is a stock with a market capitalization over $10 billion. The best-known companies in the United States all have large cap stocks — and large-cap stocks make up around 90% of the total U.S. market. Some examples of large-cap stocks that are also household names include:

• Coca-Cola (NYSE: KO)
• Walmart (NYSE: WMT)
• Facebook (NASDAQ: FB)
• Clorox (NYSE: CLX)
• Unilever (NYSE: UL)

Large-cap stocks often have higher share prices, but they come with a number of benefits. Some of the biggest reasons why investors choose large cap stocks include:

• Stability: Companies that issue large-cap stocks are usually market leaders with very little price fluctuations. This makes them a safer investment when compared to penny stocks or stocks under $10.
• Transparency: Large-cap stocks typically have very transparent earnings reports and corporate structures. You can almost always find information, analysis and expert opinions on these stocks without doing hours of research, making it very difficult to get involved in a scam or price manipulation.
• Higher average trading volumes: Large-cap stocks have higher average daily trading volumes than mid-cap and small-cap stocks. This means that if you need to sell your investments, you’re much more likely to be able to unload your shares quickly.

Many large-cap stocks are also considered to be blue chip stocks as well. A blue chip stock is the stock of a company that has a long history of profitability, very little debt and an overall very consistent business in place. Blue chip stocks usually have high levels of diversification as well — if they have a rough quarter or year, their stock is less likely to see a drop in price.

Some investors are attracted to large-cap stocks because the companies that issue them often have the stability and profit to offer consistent dividends. A dividend is a portion of a company’s profit that is paid out to shareholders. A company might issue dividends on an annual, monthly or quarterly basis, and the amount of money shareholders receive during each payment is directly dependent upon the number of shares of stock they hold. 

For example, if Company A is offering a dividend of $1 and you own 1,000 shares of the stock, you’ll receive $1,000 on the payment date. Though few companies are required to pay dividends, many large cap stocks elect to. 

Best Online Brokers for Large Cap Stock

No matter if you’re purchasing thousands of dollars’ worth of large-cap stock or you’re browsing stocks under $20 to swing trade, you’ll need to place your buy or sell orders through a broker. A broker is a person or company who’s licensed to purchase or sell stocks and other securities on behalf of another person. Though most people think of the frantic brokers of Wall Street when they imagine a stockbroker, most brokerage firms now allow you to do all of your buying and selling online through a single platform.

Don’t already have a brokerage account? Consider a few of our favorites listed below. 

Advertisement

Features to Look for in Large Cap Stock

Large cap stocks are usually more expensive than mid- or small-cap stocks. Get the most out of your money by searching for these 3 features before you invest.

• A high earnings per share value: A company’s earnings per share (EPS) value is equal to its current profit divided by the number of shares of stock outstanding. When you invest, be sure to select a stock with a solid, positive EPS — this indicates that the company is consistently profitable and isn’t paying out more money than it’s bringing in.  
• Consistently met targets: Each quarter, analysts set a “consensus EPS” for every large-cap company. A consensus EPS is an expert estimation of what a company should announce as its EPS before its quarterly earnings report is released. When you shop for large cap stocks, look for companies that consistently meet or beat the consensus — this indicates that there are less likely to be hidden financial issues within the company.
• A solid dividend yield: Instead of looking for large cap stocks that pay the highest dividends, search for ones with a solid dividend yield. A dividend yield is equal to a company’s annual dividend payout divided by its current share price. Dividend yields above 10% are usually considered to be riskier investments. 

Leveraging Your Portfolio With Large Cap Stocks

Many investors put their money into large-cap stocks because they want to purchase securities that will safely hold their investment capital. While large cap stocks are generally much more stable and see fewer price fluctuations than stocks from companies with smaller market capitalizations, large-cap stocks aren’t the only way to invest in the long-term. 

In addition to large-cap stocks, consider investing in a few total market or S&P 500 funds. These securities offer a higher level of diversification than buying individual large-cap stocks, which can better protect your investment.  

With companies like Apple and Amazon hitting the mythical trillion-dollar market capitalization in 2018, you may have considered getting in on some of the action. Large cap companies have market caps of over $10 billion and include giants like Alphabet, Microsoft, and Intel. There are more options than you think.

Large cap stocks are much less risky than small cap and mid cap stocks, but the stocks can still find modest, regular gains.