Buffett's Telecom Pick Could Shine on Dividends

T-Mobile US, Inc. (NASDAQ:TMUS) is one of the best dividend stocks for a bear market.

The company began paying dividends in 2023, starting at $0.65 per share, and has since raised the payout to $0.88 per share.

T-Mobile US, Inc. (NASDAQ:TMUS) initially gained ground by undercutting legacy carriers on pricing, gradually capturing market share. It also expanded through key acquisitions, including Sprint and, more recently, UScellular. The Sprint deal was especially significant, giving T-Mobile access to valuable wireless spectrum that underpins its network infrastructure.

As for its dividend outlook, the future appears promising. T-Mobile US, Inc. (NASDAQ:TMUS)’s growth-through-acquisition strategy is expected to boost revenue, while strong cash flow supports further dividend potential. In the first quarter of 2025, the company reported $6.84 billion in operating cash flow and $4.39 billion in free cash flow.

For the full year, it projects adjusted free cash flow, including merger-related expenses, to range between $17.5 billion and $18 billion, fueled by margin gains and efficient capital use. This is translating into one of the best service revenue-to-free cash flow conversion rates in the industry.

Warren Buffett’s investment team took notice of T-Mobile US, Inc. (NASDAQ:TMUS)’s performance as well, initiating a position in the third quarter of 2020. The company offers a quarterly dividend of $0.88 per share and has a dividend yield of 1.59%, as of June 17.

While we acknowledge the potential of TMUS as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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