Fifth-generation (5G) wireless internet continues to roll out at an aggressive pace and holds a lot of promise. The latest high-speed internet is expected to help with major advances in areas such as machine learning, cloud computing, artificial intelligence and the Internet of Things (IoT). Products ranging from self-driving vehicles to robotic surgeries should benefit from 5G internet technology. Given its potential impact, it should come as no surprise that demand for the newest internet is huge. Markets and Markets forecasts that annual revenues generated from 5G internet will grow to $331.1 billion by 2027 from $107 billion in 2022, for a compound annual growth rate (CAGR) of 25%. As the expansion continues, we look at the three best 5G stocks to buy now: September 2023.
T-Mobile (TMUS)
Shares of T-Mobile (NASDAQ:TMUS), the third-largest wireless internet carrier in the U.S., look to be taking a breather right now. Since the start of this year, TMUS stock has declined 1%. However, over the last five years, the company’s share price has risen 113%, outperforming its main competitors AT&T (NYSE:T) and Verizon Communications (NYSE:VZ) by a wide margin. Some people knock T-Mobile for not paying a dividend, while its rivals offer yields of more than 7% each. But T-Mobile more than makes up for the lack of a payout with its growth performance and superior business execution.
T-Mobile continues adding valuable postpaid wireless customers at a brisk clip and is on track to reach its goal of eight million wireless customers by 2025. Also, T-Mobile’s 5G network buildout is two years ahead of either of its main competitors, putting it in the lead when it comes to fifth-generation internet rollout. And while T-Mobile doesn’t offer a dividend, its board of directors did authorize a $14 billion share repurchase program last year. The company said its long-term plan is to repurchase $60 billion worth of stock over the long term.
Qualcomm (QCOM)
Qualcomm (NASDAQ:QCOM) is an American semiconductor company specializing in wireless technology critical to running powerful 5G networks. The company’s technology has been called the backbone of wireless internet and a key component in operating Internet of Things (IoT) technologies. Year to date, QCOM stock is up 7%, trailing other major tech stocks. Over five years, the stock has gained 64%. Currently, there’s a nice buy-the-dip opportunity in Qualcomm stock following the company’s second-quarter financial results.
Qualcomm unfortunately reported that its revenue in Q2 fell 23% from a year earlier while its earnings per share was down 51% during the same period. Slumping sales of smartphones was the main reason for the company’s financial decline. However, despite the poor results, Qualcomm remains extremely profitable with a free cash flow cushion of over $6 billion, giving it a profit margin of 22% and the means to weather tough times. QCOM is also expanding beyond wireless internet and has begun designing chips for the red-hot artificial intelligence (AI) market. The stock pays a healthy dividend that yields 2.77%.
Broadcom (AVGO)
Another microchip designer whose stock has sold off post-earnings is Broadcom (NASDAQ:AVGO). The company’s share price fell 5% after it issued forward guidance that underwhelmed Wall Street. Broadcom managed to beat consensus forecasts with its latest print; however, and remains instrumental in the infrastructure needed to expand 5G internet globally. Broadcom’s circuitry designs exist in nearly all aspects of wireless internet networks, including base stations that create wireless signals. Broadcom, a competitor of Qualcomm, also designs technology that connects smartphones and other electronic devices to the wireless internet.
Despite the pullback after its Q2 earnings, AVGO stock is still up more than 55% this year, and its share price has gained 275% over the last five years, making it a long-term outperformer. Plus, Broadcom pays a generous dividend that currently yields 2.11%, which is good for a quarterly payout of $4.60 per share based on the current stock price. In recent years, Broadcom has made several acquisitions to improve its operation. The purchases have helped to boost the company’s free cash flow profit margin to an eye-popping 52%, making it one of the best 5G stocks to buy.
Most recently, Broadcom bid $61 billion to acquire cloud computing firm VMware (NYSE:VMW).
On the date of publication, Joel Baglole did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
