Here comes the money.
In 2021, Congress passed the Infrastructure Investment and Jobs Act. It authorized $1.2 trillion in government spending.
And in typical government fashion, much of that money has taken years to make its way into the economy.
But for one major program, the wait is almost over.
As part of the bill, the Broadband Equity, Access, and Deployment (BEAD) program was created to expand high speed internet access. It has $42.5 billion in funds to hand out to companies willing to bring broadband connections to rural and underserved parts of the country.
And late last year, Louisiana was the first state to complete all the requirements, unlocking its $1.3 billion share of the money.
15 other states and territories are close behind, missing just one final step before they unlock their funds from the program.
That means that awards for free money to build more internet infrastructure are coming soon. And the right companies could start receiving most of the money later this year.
Here at Intelligent Income Daily, we’re focused on finding the safest income investments on the market. When the government is handing out free money, we pay attention… and look for the companies that are going to benefit.
Today, I’ll give you three reasons big telecommunications companies are likely to win most of the money offered by the BEAD program. I’ll also show you one way to profit as they cash in on government handouts.
Three Reasons the Right Companies Will Profit
Even though programs like BEAD are open to all who apply, the reality is that a large chunk of the awards end up going to just a few companies. Here’s why.
1. Money and experience
Like many government programs, BEAD is structured as a public-private partnership. That means even though the government is awarding free money, the companies winning those awards also have to invest their own money.
In this instance, that gives large national telecommunications companies an advantage. They have the large amounts of money needed to invest in the infrastructure BEAD awards are targeting.
They’ve also been participating in these types of programs for years, so they have the experience to meet all the requirements.
2. Existing infrastructure
Another advantage the large companies have is that they already own existing infrastructure. That makes it cheaper to expand their networks to new areas, compared to starting from scratch.
The company gets a double benefit because it gets more new customers and can also cheaply upgrade service for some of its existing customers to get better returns.
3. Lobbyists and laws
Finally, large companies can afford lobbyists to influence the laws that impact where government funds go.
According to research from BroadbandNow, 16 states have laws that restrict cities from setting up local broadband networks.
For example, in Michigan, state laws require local governments to ask for bids from private companies before setting up public broadband services.
Laws like these reduce potential competition for BEAD awards, giving the large companies more opportunities to win funding.
One Dividend Payer That’s Set Up Perfectly
Among the established large telecom company, one stands out and could win a lot of money from the BEAD program – Comcast (CMCSA).
Comcast is one of the country’s largest internet providers. It serves more than 32 million customers. The company has been preparing to participate in BEAD for more than a year. So it has an advantage even among the big-name competitors.
However, sentiment isn’t focused on that. The market has been worried about Comcast’s growth slowing down. That’s why it trades at less than 10x earnings – 40% below its average of 17x earnings over the past decade.
But billions of dollars in money from the BEAD program could help Comcast expand its network and gain more customers. So now is a good time to act, while the company is still cheap.
Comcast is a reliable income stock that has been growing its dividend for 17 years. It currently yields 3% and recently raised its payout by 6.9%. So you can collect a healthy income that’s growing faster than inflation while you wait.
Billions of dollars in government subsidies are coming soon through the BEAD program. And Comcast is one of the major companies that will have an advantage when it comes to winning that free money.
Happy SWAN (sleep well at night) investing,
Brad Thomas
Editor, Intelligent Income Daily
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Source: Wide Moat Research