Telecom Stocks Prove to Be Safe Harbor for Investors

BOSTON (TheStreet) -- The telecommunications industry is the top-performing stock sector this year, thanks to its high dividend payouts and domestic focus.

That serves to attract investors seeking shelter from the two biggest challenges they face right now: historically low yields from fixed income investments and the uncertainties stemming from Europe's continuing economic crisis and the volatility they've created in U.S. markets.

"We think the relative appeal of telecom stocks is the stable cash flow generation, minimal to zero exposure to European markets and above-average dividend yields," said S&P Capital IQ analysts in a recent research note.

Telecom stocks are paying an average 4.8% yield, which is attractive to most investors right now, given the low-rate environment and they range as high as Windstream's(WIN) hefty 10.6%.

Indeed, the sector is the highest dividend yielding sector in the S&P 500 Index, which has helped propel the group to a 12.2% return this year, including 3% in the past week. The consumer-discretionary sector is in second place with a return of 11%. The S&P 500 is up 8% this year.