BOSTON (TheStreet) -- Institutional investors, the so-called smart money, have been doing more buying than selling in only one industry this year: telecommunications services.That may well be because four of the eight companies that make up the sector in the S&P 500 Index are the ultimate defensive plays if you want to stay in stocks. They pay huge dividends and have inimitable franchises that put a floor under their share prices if the broader equity market continues to fall.
Verizon ( VZ) serves about 25% of the U.S. population via its long-haul network. Verizon Wireless, the firm's 55%-owned partnership with Europe's Vodafone ( VOD), serves about 94 million customers across the U.S. Verizon is expected to earn $2.25 per share this year. Its shares have a 5.43% projected dividend yield and a market value of $104 billion. Currently trading at $36.88, its shares are up 7% this year and 19% over the past 12 months and boast a three-year annualized average return of 12%. BMO Capital Markets gives its shares an "outperform" rating based on "the company's leading wireless franchise, extensive broadband footprint and potential for improving financial performance in the coming quarters." Analysts are all over the place on Verizon's shares, giving them 10 "strong buy" ratings, one "moderate buy," 15 "holds," one "moderate sell," and one "strong sell," according to TheStreet Ratings.
Windstream ( WIN) was formed in July 2006 in the merger of Alltel's fixed-line business and Valor Communications. The firm serves about 2.9 million phone lines, 1.9 million long-distance phone customers, and 1 million high-speed Internet customers. It has operations in 16 states, primarily in the Southeast and southern Midwest. It's also aggressive in making acquisitions, as it recently closed D&E Communications and has announced plans to acquire two relatively small telecommunications firms, NuVox, which serves the Southeast, and Lexcom, a regional services provider based in Aurora, Ill. Windstream has a projected dividend yield of 8.43% on its shares, which are currently trading at $11.82. "The market is paying a premium for dividend yield over other forms of cash deployment, including buybacks and business reinvestment," said Bank of America Merrill Lynch analysts in a research note on Windstar after giving it a "buy" rating. Nevertheless, the shares are down 9% this year, bringing the market value to $6 billion. Its shares are up 2% over the past 12 months. Analysts give it five "strong buy" ratings, one "moderate buy," and nine "holds," according TheStreet Ratings.