Top Dividend Stock #1: AT&T (T)
Dividend Yield: 5.36%
YTD Performance: -2.45%
52-Week Return: -5.85%
AT&T (T) is the biggest telecommunications provider in the United States, with a market cap of $177 billion, but it differs from some other dividend stocks in that it combines great fundamentals with the potential for significant capital appreciation.
After falling by 3.5% year-to-date, T carries a P/E ratio of 9.7, which is significantly lower than the 19.5 industry average. The stock currently trades at the $34 level — about 13% lower than the $38 high it made in 2013 — and that difference has shares looking extremely attractive, even to the company’s CEO.
Earlier in the month, AT&T CEO Randall Stephenson spoke at Morgan Stanley’s Technology, Media & Telecom Conference. Although he noted that the company’s share buybacks will be “dialed back” in 2014, he also stated that T will “be in the market buying the stock at $32 [per] share. We like the stock a lot.”
As volatility in the broad market becomes more apparent, expect bargain buyers looking for stable holdings to come into the stock. After raising the dividend per share from 45 cents to 46 cents in early 2014, T delivers a fat $1.84 annual payout, or a 5.36% yield at current levels. The company has increased its quarterly payout every year since 2008, and that should present investors with an ideal place to park their money and earn steady income at the same time.
Bryan Perry is the editor of Cash Machine, a newsletter focused on high-yield income investing with the goal of maintaining a blended total yield of 10% across two portfolios. Bryan is also the editor of Extreme Income, which uses the power of historically cheap money to create a leveraged “baby hedge fund” strategy that paves the way to massive profits and 4x greater income.