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.
