Top Dividend Stock #1: AT&T (T)
Dividend Yield: 5.25%
YTD Performance: -0.23%
52-Week Return: -5.29%
Rival wireless providers like T-Mobile (NYSE:TMUS) might be trying to elbow in on its market share, but AT&T (NYSE:T) is still the biggest telecommunications provider in the United States. It also has strong fundamentals, contrary to what investors may expect of a stock with such a high yield.
On April 22, AT&T released its first-quarter earnings report, which showed a 10.9% increase in earnings per share (EPS) over the same quarter a year earlier, from 64 cents to 71 cents, beating the Street’s expectations by a penny. What’s more, the company took a big step towards closing the gap between its customer base and that of Verizon. In the first quarter, AT&T added 625,000 postpaid customers, noting that these were the “best first-quarter net adds in five years.”
Unfortunately, none of this kept the shares from suffering a 3.4% selloff the following morning. The sticking point seemed to be forward guidance: Analysts had anticipated an 8% earnings-growth forecast, but AT&T’s actual forecast was for 4% or greater.
The company did maintain the same hefty payout of 46 cents as in the prior quarter, however, so income investors should consider using the dip as an opportunity to buy the highest-yielding Dow dividend stock at a discount and take advantage of the 5.25% current yield.
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.