The industry pays good dividends and should survive the recession.
When Britain's answer to Warren Buffett concentrates his portfolio on just a handful of industry sectors, it pays to sit up and take notice.
Through the Income and High Income funds he runs at Invesco Perpetual, Neil Woodford manages a massive £20 billion of client money -- and almost half of that is spread across just three sectors.
One of Woodford's favoured industries -- as outlined in this exclusive Fool report: "8 Shares Held By Britain's Super Investor" -- is telecommunications, where he's invested around 10% of his total funds spread across just two companies.
It's good to talk
I'd like to think telecoms can be unaffected by dips in the economy, as everyone continues to use their phone regardless of the financial climate. In Woodford's own words: "Even in a recession, people are not going to stop using their mobile phones or computers."
The telecoms sector has huge appeal to dividend investors; just look at the figures. In 2011, the industry alone represented 9.3% of the year's total dividend payout. And this was propped up by two companies in particular.
Keenly established as a long-time leading light in this sector is BT (LSE: BT-A). While Britain's largest fixed-line operator has a long-time track record of supplying dividends to its shareholders, new deals in recent months -- involving giants such as J Sainsbury (LSE: SBRY) and Standard Life (LSE: SL) -- have helped cement its dominant land-line position.
The other sector play of course is mobile-phone giant Vodafone (LSE: VOD). Imminently expanding its UK operations, Vodafone is bidding to buy Cable & Wireless Worldwide (LSE: CW) for £1bn, and instantly become the UK's second largest fixed-line operator.
With these two companies in his portfolio, Woodford looks to be holding a very good hand indeed!
Shareholder appeal
Blue-chip Vodafone has also proved itself to be one of the most appealing dividend shares on the market over the years, exemplified in part when it paid out a £2 billion special dividend to its shareholders in February. This jackpot payment came off the back of a £2.8 billion dividend the group received from a 45% holding in US mobile-phone firm Verizon Wireless.
BT looks after its shareholders, too.
As fellow Fool Cliff D'Arcy pointed out recently, BT admittedly does have one of the UK's largest corporate-pension schemes -- which, at the last count, had liabilities some £4.1 billion greater than its assets.
However, the recent news that BT has paid £2 billion into the scheme -- and plans to put another £3 billion spread over the next nine years is encouraging. In particular, the company now stands to benefit from some (very complicated!) changes to pension tax rules, which I understand should put more money into the shareholders' pockets.
The future's bright for telecoms
Both BT and Vodafone are considered to be among the country's biggest spenders on research and development, with Vodafone appearing high on this list as a company that increased R&D expenditure significantly during the recession -- and thus priming itself well for the future.
The mobile Goliath also has stakes in companies globally. In the US with Verizon Wireless, as previously mentioned, but also within emerging markets, with a 75% stake in India's Vodafone Essar. Therefore, investors should feel confident that both telecom titans are well prepared for whatever the future holds.
Foolish takeaway
Neil Woodford has a proven track record, and isn't considered the UK's answer to Warren Buffett for nothing. With the market swinging in these turbulent times, he's backing certain blue-chip companies to see us through.
Indeed, we've also identified two other sectors, consisting of just six shares, that Woodford has put the best part of 40% of his entire holdings into. You can discover the identities of these shares by downloading this free report --"8 Shares Held By Britain's Super Investor" -- today.
Tempted by telecoms? Just where should you invest today? "Top Sectors Of 2012" is our guide to three favourable industries for all investors. The Motley Fool is helping Britain invest. Better. All Fool reports are free.
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Sam does not own any share mentioned in this article.
