The telecommunications sector is a safer place for investors to hide from heightened market volatility, according to a Wednesday note to clients from Daiwa Capital Markets. “In a period of economic and market uncertainty, we see the telco industry’s steady business, stable customer base, & predictable financial performance as a welcome haven for anxious investors,” analyst Jonathan Kees wrote. “Because telcos provide essential services, business is stable and revenues are recurring. While there have been shifts in market share amongst the three U.S. telcos, market positions have been relatively steady in this oligopoly.” Kees upgraded T-Mobile and Verizon Communications , the top two mobile phone carriers by market share, in the 13-page report. He rated Verizon a buy, the highest rating possible, while T-Mobile earned an outperform. Both stocks have handily beaten the broad market so far in 2026, with Verizon soaring 20% and T-Mobile gaining more than 6%. The S & P 500, meanwhile, has traded between a gain of 2.7% at this year’s high and a loss of 0.7% at this year’s low. In addition, Verizon yields 5.89% while T-Mobile’s dividend yield is 1.91%, according to FactSet data as of Wednesday’s close. Kees’ $58 price target on Verizon implies upside of 21% over the next 12 months, while the T-Mobile forecast of $240 corresponds to another 13%. Best risk-reward “We see VZ as having the best risk-reward, justifying its upgrade,” the analyst wrote. “We see TMUS maintaining its growth leadership given the recent investor update on outlook and the stock pull back, warranting an upgrade, in our view.” T-Mobile is down more than 16% over the past six months. VZ YTD mountain Verizon yields almost 6% and is 20% higher in 2026. As catalysts for the upgrades, Kees highlighted generous shareholder return plans for 2026 and beyond that Verizon and T-Mobile have promised. Both have included dividends as part of their capital return plan. Kees noted that Verizon has a unique history of increasing its dividend payments on an annual basis. Meanwhile, the convergence of broadband and wireless services should also serve as a major growth driver for both stocks. “Both VZ and TMUS are leading in [Fixed Wireless Access] broadband customers and should continue to see a healthy level of net adds going forward,” Kees wrote. Kees also applauded the two companies “price rationality” in a competitive and mature industry. Verizon will most likely keep prices where they are, while T-Mobile seems to be moving more towards innovation and value-added offerings. The analyst noted that even after the run-up this year, valuations remain attractive for Verizon and T-Mobile.
