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Investing in 5G stocks

It’s positioned to change the world, but the process may take decades.

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The world is abuzz with talk of 5G technology — what it is, how it works and how it has the potential to impact almost everything we do. But the network will take many years to update, and not all the companies in this space will survive the trek to full implementation.

What are 5G stocks?

5G stocks are stocks from companies that produce the hardware and software that makes 5G technology possible. These include a mix of network service operators and hardware manufacturers.

Why invest in 5G stocks?

5G technology is taking off in a big way. GSMA reports that by 2024, the technology will represent a $13.1 billion increase in global GDP — a figure that’s expected to swell to $565 billion by 2034. And Qualcomm believes the global expansion of 5G will generate up to 22.3 million jobs by 2035. This technology isn’t so much a question of if, but when.

With 5G already rolling out across major carriers in Canada, it’s really only a matter of time before the technology becomes a cornerstone of our modern lives.

And beyond the obvious perk of a speedier mobile connection, 5G is expected to have a hand in all sorts of technological advancements, further fueling its growth and market impact. This network will help speed the evolution of autonomous vehicles, VR technology, telemedicine, remote surgery and so much more. Its applications are seemingly endless and implementation is already underway.

What is 5G?

5G is the fifth-generation mobile network. It’s the next step in the evolution of how we transmit data and is made possible by improvements in antenna design, cell towers and frequency ranges.

The technology is intended to deliver faster data speeds, increased bandwidth and a more reliable network. But as it stands, much of the world still operates on 5G’s predecessor: 4G LTE. And that’s because the process of upgrading to 5G is a tedious and time-consuming one: New cell sites must be built and radios, cell towers and networks will need updating.

The fifth-generation mobile network began rolling out to Canadian cities in early 2020, although it had already been available in select US cities back in 2018. Today, Rogers, Bell and Telus have all launched 5G networks in select cities across Canada, with Rogers planning to launch in over 60 cities by the end of 2020. Once live, any device that connects to a 5G network can access more bandwidth, quicker data transmission and more stable connectivity.

Risks of investing in 5G

At this point, 5G feels like nothing short of a certainty — so what’s the catch? Well, revamping a global mobile network isn’t easy. It requires money, cooperation and most of all, time.

The process of getting 5G off the ground will take many years. And unanticipated obstacles could bog down the process in the interim, including a new legislature that controls or limits the applications of the technology.

The technology’s newness is also a contributing factor for investors, as it’s difficult to know which companies will make it in the long run — and the implementation of 5G is expected to be a very long run.

Compare 5G stocks

The list below shows some of the 5G stocks Canadian investors can buy into on either Canadian or US exchanges. If you’re interested in a specific company, take some time to carefully research it — including its history and financials — before you buy in.

  • TELUS Corporation (TSX: T). 5G carrier in Canada
  • BCE Inc. (TSX: BCE). 5G carrier in Canada
  • Rogers Communications Inc. (TSX: RCI.B). 5G carrier in Canada
  • Sierra Wireless, Inc. (TSX: SW). Develops modules and chips used in wireless devices; supplies major companies in the telecommunications industry.
  • Enghouse Systems Limited (TSX: ENGH). Products and solutions for managing 5G networks
  • Verizon Communications Inc. (NYSE: VZ). 5G carrier in the US
  • AT&T Inc. (NYSE: T). 5G carrier in the US
  • American Tower Corp (NYSE: AMT). Wireless communication towers; long-term contract with US 5G carrier, T-Mobile.

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To invest in 5G stocks, you’ll need a brokerage account. Review your platform options below.

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Do 5G stocks pay dividends?

Yes, many telecom stocks pay dividends including BCE Inc. (TSX: BCE), TELUS Corporation (TSX: T), Enghouse Systems Limited (TSX: ENGH), American Tower Corp (NYSE: AMT), AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ). However, not all stocks pay dividends. As of the time time of writing, this includes Sierra Wireless, Inc. (TSX: SW).

Whether or not a company pays dividends is up to its board of directors’ discretion. Rather than make payments to shareholders, board members may opt to reinvest profits back into the company to accelerate growth. On the other hand, they may choose to payout dividends to strengthen the company’s shareholder base and attract new investors.

You can check whether a company pays dividends by visiting its website or by viewing its financials on sites like Yahoo Finance.

What ETFs track the 5G category?

You can get exposure to 5G companies by investing in ETFs that hold stocks in specific 5G producers and carriers or by investing in ETFs that track the communication and technology sectors overall.

In addition to Canadian ETFs, you can also explore ETFs that trade on stock exchanges in other countries like the NYSE in the US. There are several Canadian-based brokerages that offer access to international exchanges on which communications and technology ETFs trade including Interactive Brokers and Questrade.

The following ETFs offer exposure to 5G semiconductors, telecom chip and gear makers, cloud computing services, satellite companies and more.

  • Evolve Innovation Index Fund (TSX: EDGE)
  • BMO Global Communications Index ETF (TSX: COMM)
  • Communication Services Select Sector SPDR (NYSEARCA: XLC)
  • Defiance Next Gen Connectivity ETF (NYSEARCA: FIVG)
  • Global X MSCI China Communication Services ETF (NYSEARCA: CHIC)
  • Pacer Benchmark Data & Infrastructure Real Estate SCTR ETF (NYSEARCA: SRVR)
  • SPDR S&P Telecom ETF (NYSEARCA: XTL)
  • Vanguard Communication Services ETF (NYSEARCA: VOX)

Bottom line

5G technology is chock-full of potential — both for investors and the world at large. But the technology will take many years to implement, and some companies may not survive the journey.

Review your brokerage account options across multiple platforms to find the account that best meets your needs.
Image from Getty Images

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

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