Earn a 3.5% Dividend Yield from T-Mobile Stock Using This Hack

T-Mobile TMUS, also known as the "Un-carrier," is one of the largest providers of telecommunications services in the United States, with 117.9 million customers as of its third quarter ended September 30, 2023.

While its stock has had an incredible run over the last decade, returning nearly 400% since January 2014, it's not as great of a growth story today as it once was. While it may be a reasonable stock for value investors to consider, income investors were recently able to put T-Mobile on their radar when the company initiated its first quarterly dividend. The company initiated its quarterly dividend in December 2023, and it said it expects to grow it by 10% annually.

T-Mobile's quarterly dividend rate currently stands at $0.65 per share, which equates to $2.60 annually and gives it a yield of about 1.6% today. A 1.6% yield is better than nothing, but there's a way you can earn more.

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A Hack to Earn a 3.5% Yield from T-Mobile

Instead of buying T-Mobile and earning a 1.6% yield, you can buy American Tower AMT, which T-Mobile is a customer of, and earn a much higher yield. American Tower is the world's largest owner and operator of multi-tenant communications real estate. Its portfolio currently consists of nearly 225,000 communications sites across the globe.

Tower REITs like American Tower generate income by leasing space on their towers to wireless carriers, telecommunications companies, and other communication service providers, like T-Mobile. The demand for tower space has increased with the growth of mobile communications, 5G technology, and the expansion of wireless networks.

American Tower currently pays a quarterly dividend of $1.70 per share, which equates to $6.80 per share annually and gives its stock a yield of about 3.5% today. The company has also raised its annual dividend every year since converting to a REIT in 2012, making it both a high-yield and dividend-growth stock. 

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