Current Dividend Yield: 4.8%
Performance So Far in 2012: +24%
One of the biggest stories in 2011 — in case you were living under a rock — was that AT&T (NYSE:T) tried to leapfrog rival Verizon (NYSE:VZ) in the wireless market via a buyout of T-Mobile. But regulators ran interference, and AT&T abandoned its bid.
Don’t think that means the biggest dividend payer in the Dow Jones Industrial Average should be cut loose from your portfolio, though. With a dividend yield of about 5%, this Dependable Dividend Stock is a heck of an income play. And with a 20% surge in 2012, it’s showing strong investment potential on capital-gains basis alone.
The story is the same for AT&T as Verizon, where a strong balance sheet and its entrenched status are offset by the lack of growth and the highly regulated nature of the telecom sector (case in point: the squashed T-Mobile bid). AT&T admittedly fell short on the top line in its previous recent report, so there is indeed risk and you must watch the next report closely. But it’s not like this company is in any danger of losing its dominance anytime soon.
Admittedly, AT&T isn’t “growthy” and won’t deliver massive share appreciation. But if you’re looking for a big dividend payer that will keep throwing off cash for decades, AT&T might be the best bet in the Dow.
AT&T reports earnings Oct. 24.
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP. As of this writing, Jeff Reeves did not own a position in any of the aforementioned securities.