Cogent Communications Offers a Compelling Opportunity
When investors think about telecom dividend stocks, two names usually come to mind: Verizon Communications Inc (NYSE:VZ) and AT&T Inc (NYSE:T).
Why?
Because they are the household brands. Investors see them everywhere. These companies sponsor NFL games, their ads are always on the TV, and they have extensive wireless networks.
But here’s the thing, VZ stock and T stock aren’t the best income opportunities.
Sure, they are massive, but their dividends are underwhelming, to say the least. In AT&T’s case, there was even a dividend cut not too long ago.
Look, this doesn’t mean one should completely ignore telecom stocks; I’m just saying that income investors should look beyond the top two or three names.
Take a look at Cogent Communications Holdings Inc (NASDAQ:CCOI), for example. It is quietly doing what these telecom giants struggle to do: growing the business and paying a rising dividend.
Most likely you haven’t seen an ad for Cogent on TV or been to a stadium that’s named after it. Nevertheless, CCOI stock seems like a very compelling opportunity in the telecom sector at the moment.
What Does Cogent Communications Do?
Cogent Communications focuses on providing high-speed Internet access, data center colocation, and internet protocol (IP) transit services to businesses, carriers, and governments.
At its core, Cogent runs a dedicated, fiber-based internet network that connects over 3,500 locations in 292 markets and serves 57 countries. Simply put, it is one of the largest and most interconnected internet networks in the world. (Source: “Cogent,” Cogent Communications Holdings Inc, last accessed June 11, 2025.)
The main difference between Cogent Communications and the other telecom companies is that It sells to large enterprise and wholesale customers who need reliable bandwidth, avoiding consumers that generally pay little and have a higher churn rate. It also doesn’t require bigger infrastructure, like retail stores, etc.
CCOI Stock Gets Dividend Boost or 51st Consecutive Quarter
Now let’s talk numbers…
At the current price, CCOI stock offers a dividend yield of 8.25%, paying $4.04 per share on annual basis. Certainly, the yield here isn’t as high as you’d get from business development companies or real estate investment trusts, but there’s something significant to note here: Cogent Communications has increased its dividend for 51 consecutive quarters.
The company’s latest quarterly dividend was $1.01 per share, compared to $1.005 per share in the first quarter of 2025. This represents an increase of 0.5% quarter over quarter.
Here’s something else that’s important to know: Cogent Communications’ management has made dividend growth a key part of its capital allocation strategy.
Mind you, the dividend with CCOI stock is safe, too.
In its latest earnings report, Cogent generated $36.35 million in cash from operations. This amount was significantly higher than the $19.21 million in the same period a year ago. (Source: “Cogent Communications Reports First Quarter Results and Increases its Regular Quarterly Dividend on its Common Stock,” Cogent Communications Holdings Inc, May 8, 2025.)
How’s CCOI Stock Expected to Do?
On the surface, CCOI stock seems to in very rough shape.
Since early 2025, there’s been a serious decline in the stock price. At the time of writing, CCOI stock is trading below its 50-week and 200-week moving averages. This suggest that the intermediate-term and long-term trends are pointing downwards.
Plus, CCOI stock has also dropped below a major support level at around $50.00. Remember technical analysis 101: when a support breaks, it becomes resistance.
Chart Courtesy of StockCharts.com
But that’s just based on what the chart is saying.
You see, from a financial performance perspective, 2025 is expected to be a rough year for Cogent Communications, but numbers should improve in 2026. Also remember that the stock market is a forward-looking animal; once there’s even a slight whiff of the financial performance improving, investors will flock to buy CCOI stock.
It’s also worth paying attention to short interest.
As per the most recent data, over 16% of Cogent’s entire float (shares available for trading) is short. This is a very high figure, making CCOI stock a contender for a short squeeze.
With such a big bearish bet on CCOI stock, any good news would scare investors who are short. The only way short investors can get out of their trades is by buying back the stock. If a large number of investors ditch their positions, this could lead to a spike in the stock price.
The Lowdown on CCOI Stock
Mainstream telecom stocks like AT&T and Verizon provide sluggish dividends, while CCOI stock beats them by a very large margin.
Here’s what a shareholder gets with CCOI stock:
- A 8.25% dividend yield, with 51 straight quarters of increases
- A high-margin business focused on customers, with a low churn rate
- Real growth and cash flow
- Management that’s committed to shareholders
In a sector full of bloated giants, Cogent Communications is lean, focused, and investor-friendly. This could be the reason why it’s so loved by institutional investors. As per the most recent data, 96.3% of all outstanding shares are owned by institutional investors. BlackRock Inc, the biggest shareholder of CCOI stock, holds over 6.6 million shares. (Source: “Holders,” Yahoo! Finance, last accessed June 11, 2025.)