AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) are often compared by investors as the same sort of companies. They both dominate communications in mobile and terrestrial phones and data plans. But after that, there has been a clear difference in how Verizon and AT&T are moving their businesses.

Both companies had already gotten into content delivery to compete against cable. AT&T then went out and acquired DirecTV and has been expanding in Latin America. Verizon acquired AOL and is in the process of acquiring Yahoo. These are different paths with a common goal: finding the next leg of growth.

It goes without saying that equity analysts and credit ratings analysts often look through entirely differently sets of eyes. 24/7 Wall St. took a look at a credit ratings report from this week and at outside data from Thomson Reuters to see what the equity analysts are viewing. What stands out is that AT&T has outperformed so far in 2016, but there are differing expectations here for what lies ahead.

This week’s Standard & Poor’s report talks about how the paths of AT&T and Verizon differ. The view from S&P is that AT&T’s $14 billion infrastructure investment, its expansion in Mexico and its suite of new products may drive stronger revenue growth in comparison to rivals like Verizon. Still, S&P sees both AT&T and Verizon facing obstacles and opportunities.

This diversification of revenues and opportunities will be paramount in the coming years. After all, there has been a secular decline in wireline telecom, and even the wireless business has, at least for the most part, peaked in America. Hint: how many adults and teenagers do you know who do not have a phone?

S&P Global Ratings believes that AT&T and Verizon are both taking different roads in their pursuits for growth.  There are potential benefits from new technologies and recent acquisitions, and then there are the device installment plans.

S&P’s Allyn Arden said:

AT&T is diversifying its overall revenue base by expanding internationally and creating its own over-the-top mobile to deliver video content over the Internet.  The company is also leveraging its national video platform obtained via its DIRECTV acquisition, while investing in fiber to improve its network capabilities.

AT&T’s expansion into Mexico and the DirecTV mobile video product looks highly promising. The company’s $14 billion of investments from 2012 through 2015 to upgrade its network capabilities will ultimately offer a more robust experience to its customer base.

On Verizon, Arden noted:

Verizon, in contrast, divested some of its wireline business assets, while increasing its presence in mobile video distribution, digital media, and the Internet of Things.

On the other hand, Verizon’s mobile video and digital media strategy has yet to produce significant results, and it may be challenging to yield strong revenue growth longer term, given the company’s limited experience in these businesses.

As far as which is best, S&P believes that both strategies offer some revenue growth potential. They also both carry some risks and long-term uncertainties. It is important to realize that perhaps focusing on revenues may not be the only metric that matters. S&P’s report views AT&T’s operating strategy as being more favorable than Verizon’s operating strategy. Still the caveat here is “at least for the next couple of years.”

Again, 24/7 Wall St. wanted to look elsewhere rather than only focusing on a report focused mostly on credit ratings instead of what the expectations are for equity investors.

It is no secret that AT&T has a higher dividend yield than Verizon, but investors might want to notice that the relative yield comparison is now closer than it has been in recent years. AT&T yields 4.89%, versus 4.58% for Verizon. These are both very high dividend yields, and the reality is that many income investors are going to pick apart the companies to see which they prefer if the yields have just a 0.3% difference.

A look at Thomson Reuters shows that AT&T’s revenue of $146.8 billion from 2015 is expected to be $164.6 billion in 2016, and that is expected to be closer to $172.5 billion in 2019. That puts the 2019 versus 2015 growth at an expected 17.5% over the four-year period.

Thomson Reuters also showed Verizon’s revenue of $131.6 billion in 2015 going down slightly to $126.3 billion in 2016. Still, it sees revenue growing to $130.2 billion in 2019. That is effectively flat revenue expectations, but that does not include larger deals including or after Yahoo, and that leaves room for growth.

At $39.25, AT&T shares are down 10.6% from the 52-week high of $43.89. AT&T’s consensus analyst price target of $42.61 implies an upside of 8.3%, plus that 4.89% dividend, in a total return. AT&T has a market cap of $241 billion, and its total return so far in 2016 has been a gain of 19.9%. Thomson Reuters shows that AT&T’s dividend of $1.89 per share from 2015 is expected to grow to $2.07 per share in 2019 (10% growth in total).

Verizon’s recent share price of $50.43 is down 11.4% from its 52-week high of $56.95. Verizon’s consensus price target of $54.63 implies upside of 8.3%, and then there is the 4.58% yield to add on for a total return expectation. Verizon’s market cap is $205 billion, and its total return so far in 2016 has been 14%. When 24/7 Wall St. ran its bullish and bearish case on Verizon for 2016, the view was for an expected 13.3% total return. Thomson Reuters shows that Verizon’s dividend of $2.23 per share in 2015 should grow to $2.45 per share in 2019 (10% total dividend growth).

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As you may have guessed, the paths of AT&T and Verizon may be different in how each plans to achieve growth. Still, the current market conditions are signaling that the expectations, at least for the equity investors, may be quite similar here. Perhaps the 5G build-outs ahead and pending or unknown acquisitions will change how things now look.

Expectations for each telecom giant may change through earnings season, and we should keep in mind that the highly expected 5G roll-outs probably will not start really adding into new revenues until 2018 to 2022.

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