Telecom companies have a long history of paying out healthy dividends. In fact, with an average dividend yield of almost 5%, telecom is the highest yielding sector in the S&P 500, according to S&P Dow Jones Indicies.
Under current law, the top tax rate is 15% on qualified dividend and long-term capital gains. While Obama would start taxing dividends at ordinary income tax rates, Romney would exempt dividends from taxes.
That's why analysts expect a Romney win would boost the overall sector and relieve investors who hold stakes in companies like AT&T(T), Verizon(VZ), Windstream(WIN) and CenturyLink(CTL), which pay dividends of 4% to 9%.
A Republican victory would also likely support telecom mergers, such as the rejected AT&T and T-Mobile deal, said Sam Stovall, chief equity strategist at S&P Capital IQ. That could benefit companies like MetroPCS(PCS) and Leap Wireless(LEAP), which have been rumored to be takeover targets.