Buy AT&T or Verizon Stock if Market Volatility Resurges?

AT&T and Verizon shares have outperformed the broader market year-to-date, rising +20% and +9% respectively, driven by 5G expansion and strong demand for wireless and broadband services. Both companies are expanding their 5G networks, with AT&T adding 324,000 postpaid wireless subscribers and Verizon reporting $20.8 billion in wireless service revenue during Q1; furthermore, their valuations are attractive at 13.2X and 9.3X forward earnings, respectively, compared to T-Mobile's 22.8X, and they offer dividend yields exceeding 4% and 6%.

Analysis

AT&T and Verizon have demonstrated notable resilience in the current market environment, with their respective stocks appreciating 20% and 9% year-to-date, starkly contrasting with the S&P 500's 1% decline. This outperformance is underpinned by robust demand for their wireless and broadband services, positioning them as effective hedges against broader market volatility. Both companies are actively capitalizing on the 5G expansion: AT&T reported 324,000 postpaid wireless net additions and 181,000 fixed wireless access (FWA) subscribers in Q1, alongside consistent fiber optic growth, adding over 200,000 subscribers for 21 consecutive quarters and expanding its fiber network by 600,000 new locations with plans to reach 30 million fiber locations by Q2-end. Verizon showcased industry-leading Q1 wireless service revenue of $20.8 billion and added 308,000 new 5G Home Internet customers, growing its total FWA subscriber base to over 4.8 million. The 5G FWA market itself presents a significant growth runway, valued at over $45 billion last year and projected to expand to more than $238 billion by 2030, reflecting a compound annual growth rate of 40.5%. From a valuation perspective, AT&T and Verizon appear attractive, trading at forward earnings multiples of 13.2x and 9.3x respectively, a considerable discount to T-Mobile's 22.8x and the Zacks Wireless National Industry average of 21.4x. Furthermore, both companies trade below a 2x price-to-sales ratio and offer substantial dividend yields (AT&T >4%, Verizon >6%), significantly higher than T-Mobile's 1.46%. Despite a current Zacks Rank #3 (Hold) for both, their essential service nature, ongoing 5G deployment, and strong capital returns suggest potential for long-term shareholder value, even if better buying opportunities might arise.

Key Decisions for Investors

• Investors seeking defensive positioning and income generation during market volatility should consider AT&T and Verizon, given their respective +20% and +9% year-to-date stock performance and dividend yields exceeding 4% and 6%.
• The current forward P/E multiples for AT&T (13.2x) and Verizon (9.3x) present a notable discount compared to T-Mobile (22.8x) and the industry average (21.4x), offering a potentially attractive entry point for exposure to the high-growth 5G FWA market, which is projected at a 40.5% CAGR through 2030.
• While both stocks currently carry a Zacks Rank #3 (Hold), suggesting near-term patience, long-term investors should weigh the strong subscriber growth in key segments like fiber and FWA, significant 5G expansion strategies, and robust dividend payments against the possibility of more optimal entry points in the future.