Telecom Stocks: VZ, SBAC Shine as Defensive Plays in Volatile Markets

Recent actions regarding international trade policy under President Donald Trump’s administration have introduced significant volatility into the financial markets. As investors seek shelter from this turbulence, traditionally defensive sectors are garnering increased attention. Among these, the telecommunications industry is emerging as a noteworthy area, potentially offering resilience during periods of economic uncertainty.

Market Backdrop and Sector Resilience

The broader market has faced headwinds following the announcement of new tariffs on April 2nd. For instance, the S&P 500 index experienced a decline of roughly 7% shortly after the announcement, contributing to a more significant drop year-to-date. In such environments, certain segments tend to hold up better than others. A report from Bank of America (BAC) highlighted that specific telecommunications stocks have historically demonstrated a capacity to outperform the S&P 500 (SPY) during market corrections, making them potential candidates for portfolio protection. Strategists noted that telecom equities have often shown greater resistance during market downturns.

Spotlight on Telecom Performers

Several companies within the sector are drawing positive notice from analysts and investors.

Verizon Communications (VZ)

Verizon stands out as a prime example. The company’s shares have recently achieved gains exceeding 10%, substantially outpacing the general market trend. During a notable period between February 18th and April 8th, VZ delivered an impressive 18% relative return compared to the S&P 500. Further enhancing its appeal, particularly for income-focused investors, is its attractive dividend yield of 6.1%, which underscores its defensive characteristics.

Analyst sentiment towards Verizon remains largely positive. Based on an LSEG survey:

Analysts Surveyed	27
“Buy” or “Strong Buy” Ratings	11
Average Price Target Upside	~7%+

Furthermore, Kutgun Maral, an analyst at Evercore ISI, recently upgraded Verizon’s rating to “outperform,” identifying it as one of his top selections within the sector. Maral pointed out that the stock’s robust performance reflects a strategic shift by investors towards the wireless segment, valued for its defensive nature, strong domestic focus, and minimal exposure to tariff impacts.

SBA Communications (SBAC)

Another company highlighted by Bank of America is SBA Communications, which specializes in essential wireless communications infrastructure. SBAC shares have also shown strength, recently posting gains of over 12%, again performing better than the S&P 500 index. While its dividend yield is more modest at 1.9%, its overall performance has been solid.

The positive view is echoed by other analysts. “Tower stocks remain a safe haven in our opinion,” stated Greg Miller, an analyst at Citizens, in a recent report, expressing an optimistic stance on SBAC. This sentiment is broadly shared, with the majority of analysts surveyed by LSEG projecting further gains; the average price target suggests a potential upside of nearly 9% from its current trading levels.

Telecom as a Stability Play

In a climate characterized by market swings and trade-related unpredictability, the telecommunications sector is increasingly viewed as a source of stability. Companies like Verizon and SBA Communications exemplify the sector’s potential to offer investors both defensive qualities and opportunities for return, providing a means to potentially safeguard portfolios while still participating in market opportunities.