People are worried about the economy right now. The combination of weak hiring, high gas prices, and a raft of large corporate layoff announcements has led to investors taking a second look at some defensive stocks that haven’t done much in recent years.
Two stocks that fit the bill are AT&T and Verizon. Over the last 10 years, they’ve trailed the market as investors prized asset-light companies with big profit margins and even bigger growth. AT&T has annualized at just under 6% per year, while Verizon has done just under 5%. That’s basically bond-like performance, as these companies spent the last few years unwinding some of the worst media deals in history.
AT&T spent $85 billion to buy Time Warner, ultimately spinning it off (along with $45 billion in debt) into a merger with Discovery Media. Not to be outdone, Verizon inexplicably decided to spend a combined $10 billion to acquire AOL and Yahoo, both of which it disgorged shortly afterward. Wall Street analysts began referring to AT&T and Verizon as “Dumb and Dumber” and shareholders had to watch as years of cash flow were washed down the drain from ill-fated M&A.
But that was then and this is now. AT&T is doubling down on what it does best—communications and fiber optics for voice, wireless and data. It’s in a great position for the Age of AI. Verizon just posted a blow-out subscriber number the last time it reported earnings. The effects of its costly price war with T-Mobile seem to be ebbing.
And in the end, when investors are looking for companies with defensive characteristics, they usually come back to the mobile phone business. In the modern economy, a stressed consumer would probably give up their car or go delinquent on a credit card payment before they’d turn off their phone.
Verizon Communications Inc. (VZ) saw a massive gap higher following its year-end 2025 report, currently trading around $50. Under new CEO Dan Schulman, Verizon posted its best phone net-add quarter in five years—551,000 consumer adds and 616,000 total in Q4 alone.
Full-year operating revenue reached $138.2 billion (up 2.5%), and adjusted EBITDA hit $50 billion for the year. Verizon also closed an acquisition in Q1, expanding its fiber access to over 30 million homes and businesses and bringing its total fixed wireless access and fiber broadband connections to over 16.3 million.
Free cash flow is inflecting higher. FCF troughed at $14.1 billion in fiscal 2022. The company is now guiding to $21.5 billion or more in 2026, which would be the highest FCF since 2020. Management says the growth rate of 7%+ eclipses its 5-year average FCF growth rate of roughly -1% annually.
Crucially, Verizon is shifting towards being more shareholder friendly. The board authorized up to $25 billion in share repurchases over three years, and the annual dividend was raised for the 20th consecutive year, now at a compelling 5.62% yield, which is the 18th highest within the S&P 500.
This was one of the best post-earnings reactions Verizon has seen in years. The stock exploded higher through the 200-day around $43 and never looked back, now digesting that move in a tight range just above $50. That’s exactly what you want to see after a vertical advance—no round-trip, no urgency to sell, just sideways consolidation while the moving averages catch up. The 50-day is rising fast and sitting around $47, starting to close the gap beneath price.
If this base resolves higher, a continuation move into the low-$50s and potentially beyond is possible, since there’s very little overhead supply left from the prior year. The 200-day at $43 defines whether this is still a trend repair or something else.
AT&T Inc. (T) saw a big jump higher post-earnings too, and like Verizon, momentum has carried this name higher, currently trading around $30. Free cash flow of $16.6 billion was reported for the year, with guidance for $18 billion+ in 2026, which put dividend sustainability concerns to rest. AT&T currently pays a 3.85% yield.
Surprisingly, the old telecom company is starting to see some growth. There were 1.5 million net phone adds and 1 million fiber net adds for the year, which pushed total fiber subscribers to 10.4 million. The company’s convergence rate—customers utilizing both wireless and fiber—climbed 200 basis points to 42%, a metric that tends to correlate with lower churn and higher lifetime value.
AT&T returned over $12 billion to shareholders in 2025 through dividends and buybacks, a 50%+ jump from 2024, and guided for double-digit adjusted EPS compound annual growth through 2028. This represents a significant shift in capital allocation priorities following the media asset divestitures.
The stock posted a golden cross last week, with short-term momentum outpacing the longer-term trend as buyers get more aggressive. The stock spent most of the back half of last year in a downtrend, making lower highs and undercutting its 200-day. That changed in January. Since then, AT&T has reclaimed both the 50-day and 200-day and is now building a base just under $30.
The recent action is tight, with higher lows forming into resistance, which puts pressure on that $29-30 zone. A clean breakout above $30 opens the door to a move back toward the low-$30s, which is the next logical supply area from early 2024.
T-Mobile US Inc. (TMUS) represents a different approach within the wireless space, currently trading around $215. The stock has fallen about 11% over the past 6 months as investors reassessed the company’s near-term growth outlook despite continued operational strength.
Unlike AT&T and Verizon, which are valued as slow-growth dividend plays, T-Mobile trades at a forward P/E of 20.2—nearly double its peers. The premium reflects faster expected revenue growth and market share gains. T-Mobile holds a 35% market share versus Verizon’s 34% and AT&T’s 27%, making it the largest wireless carrier by subscribers.
At the Morgan Stanley Technology, Media & Telecom Conference this month, CEO Srini Gopalan said T-Mobile’s business is performing in line with expectations for Q1, with service revenue growing about 4x faster than competitors and EBITDA growing about 2x faster. Fixed wireless broadband remained a key growth driver after reaching 8 million customers, doubling its base over the past two years.
Fixed wireless matters because it allows T-Mobile to deliver home internet using its wireless network instead of building expensive cable infrastructure, creating a capital-light and high-margin growth opportunity. This contrasts with traditional cable companies and telcos investing heavily in fiber buildouts.
Management highlighted efficiency gains from digital and AI initiatives, noting the company has already removed 50% of customer care calls on its path toward a 75% reduction target. T-Mobile still expects about $3 billion of efficiency gains by 2027, with Gopalan emphasizing the company’s focus on “best network, best value, best experience.”
The company’s 5G network remains a key differentiator, offering ultra-capacity coverage in urban and suburban areas. T-Mobile leverages a vast spectrum portfolio, including 600 MHz low-band for wide coverage and 2.5 GHz mid-band for speed. This dual strategy ensures both reach and performance. Network metrics consistently show T-Mobile ranking highest in speed and reliability tests.
T-Mobile is also shifting toward greater capital returns. CFO Peter Osvaldik said in February that the company was sitting on a “significant amount of capacity” both to invest in its network and dole out cash to shareholders over the next two years, in the form of dividends and buybacks. This marks a maturation in T-Mobile’s strategy following completion of the Sprint merger integration.
Based on valuation models using 5.2% revenue growth, 25% operating margins, and an 18.7x exit P/E multiple, analysts estimate a target price of $341, implying about 62% upside over roughly 3 years. The growth case rests on continued postpaid subscriber additions, fixed wireless expansion, and margin improvement from efficiency initiatives.
Strong free cash flow generation supports ongoing share repurchases, which can enhance per-share earnings growth even in a slower revenue environment. Revenue growth is expected to remain steady in the mid-single-digit range, supported by continued postpaid subscriber additions and expansion in fixed wireless broadband.
These three wireless carriers demonstrate different investment profiles within the defensive telecom sector. Verizon offers the highest dividend yield at 5.62% backed by improving free cash flow and a 20-year dividend growth streak. AT&T provides a 3.85% yield with double-digit EPS growth guidance through 2028 as convergence between wireless and fiber drives customer retention. T-Mobile trades at a premium valuation but delivers faster growth through market share gains and fixed wireless expansion.
The rotation into telecom stocks reflects broader investor concern about economic conditions. When consumers face financial stress, wireless service ranks among the last expenses they’ll cut. The essential nature of mobile connectivity in modern life—for work, communication, banking, navigation, and countless daily tasks—provides defensive characteristics that recession-resistant investors seek.
The wireless industry’s oligopoly structure also supports pricing discipline and profitability. With only three major national carriers, competitive dynamics have stabilized following years of price wars. T-Mobile’s subscriber growth comes primarily from cable MVNOs and smaller regional carriers rather than cannibalizing AT&T and Verizon’s core postpaid bases.
For income-focused investors, Verizon and AT&T offer compelling yields well-supported by free cash flow. Verizon’s 5.62% yield provides nearly 200 basis points more than AT&T’s 3.85%, but AT&T’s EPS growth guidance suggests potential for dividend increases. T-Mobile’s 1.84% yield is modest, but the company is shifting toward greater shareholder returns as network investments moderate post-Sprint merger.
For growth-oriented investors, T-Mobile’s premium valuation reflects superior execution and market positioning. The fixed wireless opportunity alone represents significant upside as the company targets residential broadband customers without building costly fiber infrastructure. Enterprise solutions and IoT represent additional growth vectors as 5G enables new use cases.
