Investing Topics: Verizon

America's two biggest telecoms reported second quarter earnings last week. We look at how they performed in the face of challenges from the competition.

Few companies attract as much attention when they report quarterly earnings as Telecom’s Big Two: AT&T Inc (NYSE: T) and arch rival Verizon Communications (NYSE: VZ). And the past week has been no exception.

After two consecutive winning months, it’s hard to believe utility stocks had so many detractors to start 2014. And it’s even more difficult to find anyone who will own up to being bearish then or now.

Only two Portfolio holdings have yet to turn in earnings this reporting season. Aggressive Holding ENEL SPA (Italy: ENEL, OTC: ENLAY) will unveil its fourth quarter 2013 numbers on March 11. Conservative Holding Piedmont Natural Gas (NYSE: PNY) releases its first quarter fiscal 2014 results on March 7.

The massive loss T-Mobile USA (NSDQ: TMUS) reported this week hasn’t slowed the hyperactive tweeting of its CEO John Legere. Nor apparently has the news scared off his groupies on Wall Street, though that may have more to do with continuing takeover speculation.

With large financial institutions and exchange-traded funds (ETFs) dominating daily trading, markets are as volatile as ever.

Fortunately, the key to success in utilities and essential services is the same as it’s been for more than a century: Spotting where investment will earn a fair return, and following the money to a rising stream of dividends.

Last November, I advised income investors to favor AT&T (NYSE: T) a traditional dividend paying stock, over shares of its iPhone partner Apple Inc (NSDQ: AAPL).

Fourth quarter and full-year earnings normally dominate the news this time of year. And rightly so: They’re what ultimately shape shareholder returns.

The Dow Jones Utility Average has lost ground in 17 of the 30 Januarys since 1984. Happily, only 5 of those declines led to a losing year. And in 13 winning Januarys, the average total return was 24.8 percent—the only losing year 1987.