Current Dividend Yield: 5.2%
Performance So Far in 2012: +13%
Last year, AT&T tried to leapfrog rival Verizon in the wireless market by buying out T-Mobile, but the Department of Justice refused to budge.
Roughly a year later, of course, AT&T watched all of the M&A in telecom pass it by, as T-Mobile made its own successful buyout bid for regional carrier MetroPCS (NYSE:PCS) while Japan’s Softbank swooped in for a 70% stake in Sprint … and AT&T remains America’s No. 2.
In market share, anyway. But at least where it concerns dividend investors, AT&T is the Dow’s top dog. This Dependable Dividend Stock not only has tickled income investors with a substantial 5%-plus dividend, but it also has matched the market and edged out rival Verizon in capital gains for the year-to-date.
AT&T’s story is the same as Verizon’s: It’s a big ol’ pseudo-utility with a rock-solid balance sheet and stable user base … but one with admittedly limited means of growth in a regulated industry. Its most recent earnings report showed profits and revenues that were just about flat year-over-year, and it only gained about 151,000 contract subscribers vs. 319,000 in the year-ago period.
That doesn’t mean you should avoid T shares, though. As long as you go into this venerable blue chip knowing you’re going after slow and steady income for the long haul rather than a quick run-up in shares, AT&T won’t disappoint.