AT&T and Verizon Communications may be flirting with their 52-week highs, but considering the widespread use of these wireless providers, Jim Cramer thinks both stocks are relatively cheap and should be bought.
With Verizon , investors get one-half of a wireless company, as Vodafone Group owns the other half. Cramer thinks this business has multiple years of growth ahead of it, though. He expects a majority of subscribers will upgrade to its heavily subsidized smartphones within the next 12 months, which will likely result in considerable margin expansion.
In addition, Verizon has developed other ways to generate sizable amounts of cash without a ton of investment. Cramer cited its Fios network for high-speed internet and landlines as examples.
Investors in AT&T get its entire wireless business. Additionally, AT&T has already paid the price to subsidize its subscribers’ migration to smartphones.
Cramer said both AT&T and Verizon share a lot of desirable traits, too. Each company exhibits consistent growth, expanding gross margins and absolutely no exposure to Europe, which still struggles with its ongoing debt crisis.
Also, both AT&T and Verizon pay “monster” dividend yields of 5.3 percent and 4.9 percent respectively. Thanks to a steady increase in mobile phone usage coupled with higher fees, Cramer thinks both companies can afford to pay these dividends for a long time.
Read on for Cramer's Top Dividend Stocks