WASHINGTON (Dow Jones) -- Large phone companies might be glorified utilities, but their stocks are still a good place for cautious investors to park money in case of a downturn.

You wouldn't know it from the reaction lately on Wall Street. So far in 2008, the stocks of the six carriers with the largest dividend yields are down a collective 11% -- ranging from a nearly 5% drop in Embarq Corp. to a 22% decline in Qwest Communications International Inc. (NYSE:Q)

Like all U.S. equities, phone stocks have been battered by talk of a recession, especially after AT&T Inc.'s (NYSE:T) chief executive said in early January that more customers were disconnected in December for failing to pay their bills.

The broad decline, however, gives an opening to investors who want to make a relatively safe bet and get a high yield at the same time.

Take Citizens Communications Inc. (CZN) The Stamford, Conn.-based phone company offers a dividend yield of almost 9%, well above the typical 3.5% rate on a certificate of deposit or the 3.9% rate on a 10-year U.S. Treasury.

Another carrier, Windstream Corp. (NYSE:WIN) (WIN), delivers an 8.3% return, while Qwest (NYSE:Q) (Q) and Embarq (NYSE:EQ) (EQ) weigh in at almost 6%.

Even industry superheavyweights AT&T (T) and Verizon Communications Inc. (NYSE:VZ) (VZ) are in the act, with returns of more than 4% each.

If these phone stocks were to fall further, the payout would get even more attractive. Windstream's (NYSE:WIN) yield could jump to 12.5% if shares fell to $8 from its current level of $12.

To cite another example, Embarq's yield would rise to 7% from 6% if its stock declined to $40 from its current price of $47.50.

"If you see some softness, [the dividend] keeps going up," interim Embarq Chief Executive Tom Gerke told MarketWatch. "It makes us a very good defensive play."

Staying connected

Does it, really? For decades, phone stocks were viewed as safe havens during downturns. Yet some analysts and investors believe a fundamental industry shift to a competitive model from a monopolistic one may have sapped its attractiveness.

Customers, for example, now can choose from a variety of options. Phone and Internet service can be had from cable operators such as Comcast Corp. (NASDAQ-NMS:CMCSK) (CMCSK) and discount Internet-phone carriers like Skype or Vonage Holdings Corp. (NYSE:VG) (VG)

In particular, consumers seem to have become enamored with their wireless phones. Some are cutting the cord completely and going entirely wireless.

"One of the last things you will pry out of people's hands is their [cell] phone. Many other things will go first," Palm Inc.