AT&T (NYSE:) and Verizon (VZ)  are the two largest telecommunication firms in the United States.

They’ve been doubted lately due to restructuring procedures, and an expensive 5G push, but I remain bullish on both stocks.

AT&T

AT&T is in a restructuring phase where it’s spinning off all of its media assets into a separate entity, jointly owned by Discovery (NASDAQ:). AT&T will retain 71% of the entity and receive $43 billion in cash, which is expected to be used to pay off debt, before embarking on a 5G push.

The firm itself has admitted that a smaller company will most likely equate to smaller dividends, but investors are getting carried away when they think AT&T won’t be a lucrative dividend-paying stock anymore.

AT&T remains at the pinnacle of the dividend aristocrat list, with UBS recently including the stock in its top 20 value stocks to buy list, due to its current dividend-paying capacity.

Adding to its 7.6% yield is a yield-to-payout ratio that’s 21.1% higher than its five-year average, while it also has stacked up $43 billion in cash from operations.

There’s no doubt that AT&T will spend more of its cash on growing the business in upcoming years, but neglecting the stock based on that is radical. AT&T will remain a top dividend play for years to come.

Wall Street considers this stock a Moderate Buy with an average target price of $32.33. Five Buy ratings have been given to the stock and five Hold ratings. One Sell rating has been assigned.

Verizon (NYSE:

Verizon’s restructuring process has been slightly different. The telecom giant recently sold its Yahoo assets for $5 billion, and it’s anticipated that the capital will be used for its 5G push.

The company has performed really well over the past year with a year-over-year growth in revenue and EBITDA of 2.4% and 2.7%, respectively.

Verizon has a profitable gap to grow its dividend payouts due to the company’s recent performance. The company has produced eight consecutive years of dividend increases, and with its payout ratio trading at 12.1% below its five-year average, we could certainly anticipate its 4.6% yield to be bolstered sooner rather than later.

Verizon is also a solid investment. The stock’s price-to-earnings ratio is trading at a 13.7% discount to its five-year average.

Wall Street is positive about Verizon. The stock has been rated as Moderate Buy based on four Buys and one Hold. An average Verizon price target $62.75 suggests 16.1% upside potential

Final Thoughts

A changing market will bring both these stocks benefits.

In anticipation of 5G war and restructuring fears, investors have ignored them. This could lead to depleted balances.

Disclosure: Steve Gray Booyens held a position in T and VZ at the time this article was published.

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