AT&T Inc. (NYSE:T) is throwing off a very exciting dividend of nearly 4.7%. And that is after a near-20% run in the stock over the course of 2016. But the dividend isn’t the only reason to look at AT&T stock.
AT&T is changing its coverage plans, bundling them with its newly acquired DirecTV and opening up new and interesting markets. All these are the real reasons to be bullish on T right now.
Plus, even after the run it has had, AT&T promises to deliver even more growth moving forward.
Let’s start with its new coverage plans. Its new Mobile Share Advantage plan is an effort to keep up with sector disruptor T-Mobile US Inc (NASDAQ:TMUS). It launched a data plan where subscribers can watch Netflix, YouTube and other streaming services without affecting their data plans.
Now, Mobile Share Advantage takes it one-step beyond. The new plan eliminates usage charges when subscribers go over their data limit and simply downgrades their access speed. Underneath TMUS’ plan, the usage consequences are similar, but this is a major step for one of the big telecoms.
It also comes as T added 800,000 new smartphone users in the previous quarter. That is the sector where the money is, and AT&T is finding compelling ways for users to upgrade to smartphones or switch over to T.
The bargain bundling that AT&T began promoting last year to switch your entire telephone and entertainment service package to T, has also been a big contributor to AT&T stock’s market share growth. The initial bundling offer was compelling, but the question is whether these customers will stick around after the introductory deal ends.
The Future of AT&T Stock
This is where it will be interesting to see if T is willing to modernize its model. It used to be you would buy into a telecom like AT&T stock and stick with it for years, just as you would with a bank. But now, given all the huge offers from big and small players, people are moving from plan to plan more easily and that long-term relationship is being tested.
Regardless, T is still a major player in the U.S. And it’s also a major player in Latin America. This is a compelling market because few countries in Latin America have had the resources to maintain traditional landline phone and cable service. Mobile becomes a liberating technology that means you can connect large populations quickly.
AT&T stock grew revenue 8% in the last reported quarter, which indicates that even as emerging markets struggle, individuals in those countries are expanding their mobile footprint.
Also bear in mind that many of these countries have split families between the U.S. and their particular homeland. T has the reputation and the power to connect those markets and make money doing so.
A perfect example is its recent announcement that it is opening up service to Cuba. Given the huge ex-expatriate community that has not been able to connect with family and friends in Cuba regularly, this alone will be a major subscriber boost.
All that and a solid, stunning dividend for T stock.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
