AT&T (NYSE:T) and Verizon Communications (NYSE:VZ) have spent years competing for the loyalty of American smartphone users and internet subscribers. Choosing between these two industry leaders depends on your outlook for infrastructure expansion and debt management through 2027.
AT&T focuses on a simplified business model emphasizing fiber and 5G deployment, while Verizon leverages its massive scale and global connectivity services. Both companies are navigating a capital-intensive industry where reliable network performance and consistent cash flow are the primary drivers of investor returns.
The case for AT&T
Within the landscape of communication stocks, AT&T has transitioned from a media conglomerate back to its roots in connectivity. It serves over 100 million retail wireless subscribers while aggressively expanding its fiber network to reach more homes and businesses. The company also manages FirstNet, a dedicated network for first responders, and is migrating older copper network users to modern high-speed alternatives.
In the 12 months ended Sept. 30, 2026, revenue reached $128.9 billion, representing growth of 3.5% compared to the prior year. Net income for this period was $13.1 billion, resulting in a net margin of 10.1%. This growth reflects steady progress in adding new wireless and fiber customers even as the company navigates a competitive pricing environment.
As of its December 2025 balance sheet, the debt-to-equity ratio was 1.6x, showing how much debt the conglomerate uses relative to its equity. The current ratio, which measures the ability to cover short-term debts with current assets, was 0.9x. In the fiscal year ended Dec. 31, 2025, free cash flow reached $19.4 billion, which is cash left after paying for operating costs and equipment.
The case for Verizon Communications
Verizon operates one of the largest wireless networks in the world, supporting approximately 147 million total retail connections. Its customer base includes nearly all of the Fortune 500 companies, highlighting its role in critical business infrastructure. Verizon recently strengthened its fiber capabilities through the acquisition of Frontier Communications and a multi-billion dollar artificial intelligence partnership with Amazon (NASDAQ:AMZN).
In the 12 months ended Sept. 30, 2026, revenue reached $139.4 billion, which is an increase of 1.4% over the previous twelve-month period. Net income for the company reached $16.4 billion, reflecting a net margin of 11.8%. Slower revenue growth compared to its peer reflects a highly mature wireless market where capturing new market share requires significant investment.
As of its December 2025 balance sheet, the current ratio was 0.9x, suggesting that short-term assets are slightly lower than short-term liabilities. The debt-to-equity ratio was 1.7x, reflecting the substantial capital needed to maintain and upgrade its national network. In the fiscal year ended Dec. 31, 2025, free cash flow was $19.7 billion.
Risk profile comparison
AT&T faces intense competition from cable giants like Comcast (NASDAQ:CMCSA) and Charter Communications (NASDAQ:CHTR) as they battle for the same pool of subscribers. The company carries significant debt from building out its 5G and fiber infrastructure, which can be expensive to service if interest rates shift. Additionally, it manages legal risks regarding older lead-clad cables and the fallout from a recent customer data breach.
Verizon must navigate pricing pressure from rivals and satellite providers like EchoStar (NASDAQ:ECHO). The company is also integrating large acquisitions like Frontier Communications, which can lead to unexpected expenses or logistical hurdles. Similar to its peers, it faces regulatory scrutiny over legacy network materials and the ongoing threat of sophisticated cyberattacks on critical infrastructure.
Valuation comparison
Both stocks trade at identical Forward P/E multiples based on future earnings estimates. AT&T offers a lower P/S ratio, comparing its price to sales over the past twelve months.
Valuation metrics include sourcing from Financial Modeling Prep (FMP) and may differ from other data providers.
Which stock would I buy for 2027?
AT&T and Verizon are mature telecom companies, and as such, their share price appreciation is unlikely to deliver outsized returns. Instead, it’s their dividend payments that are a key factor to investor returns. That’s why the better stock for 2027 is Verizon.
Both offer robust forward dividend yields. AT&T sports a 5% yield as of the week ending Nov. 13, while Verizon is higher at 6%. However, Verizon has raised its dividend payment for the last 20 consecutive years.
AT&T stopped growing its dividend after it divested entertainment companies acquired under previous management in an ill-fated attempt to attract consumers to its services. In fact, the telecom giant cut its dividend nearly in half in 2022 as part of this divestiture, and payouts have remained at that level ever since.
The two companies are fairly similar across share price valuations, debt-to-equity ratios, and free cash flow generation, which is used to pay down debt and fund dividends. So of the two, with Verizon’s impressive streak of dividend increases, it is the better stock for investors to buy.
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Robert Izquierdo has positions in AT&T, Amazon, Comcast, and Verizon Communications. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends Comcast and Verizon Communications. The Motley Fool has a disclosure policy.
AT&T vs. Verizon: Which Telecom Stock Is a Better Buy for 2027? was originally published by The Motley Fool
