Telecommunication giants AT & T and Verizon are turning a corner that will make it easier for both companies to maintain their high dividend yields, according to Citi. Analyst Michael Rollins upgraded Verizon and AT & T to buy. He maintained his target price for AT & T at $17 and raised his target price for Verizon by $1 to $40, suggesting shares stand to gain 19.6% and 19.2%, respectively, from where they closed on Monday.
He also pointed to AT & T's and Verizon's recently introduced round of targeted price increases for existing customers as an indicator of stabilizing wireless competitive landscape. Longer device holding periods from customers are also reducing upgrade costs, he added. On top of that, both stocks are trading at historically low valuations after this year's declines. Verizon is down nearly 15%, while AT & T has lost 22.8%.