AT&T Inc. (NYSE:T) is the only telecom stock that’s a Dividend Aristocrat. What does that mean? T stock raised its dividend every year for the last 25 years or more (in AT&T’s case, 32 years). No other telecom company comes close.
U.S. competitor Verizon Communications Inc. (NYSE:VZ) only has 10 years of consecutive dividend increases under its belt.
But T stock isn’t a compelling buy here simply because it has a rock-solid, growing dividend of 4.8% that it has grown an average of 3.8% a year for the last decade. Or because it has grown earnings-per-share 4.6% annually over the decade as well.
No, AT&T remains a compelling buy because it hasn’t stopped looking for new ways to grow its subscriber base, even if it needs to stretch beyond its traditional phone business. T leaders understand that the telecom is a much bigger concept these days than it has been. VZ, with its fiber optic internet and television service, was certainly a pioneer for integrated telecom services.
But being first isn’t what’s important. AT&T has responded by buying DirecTV for $63 billion and now offers bundled packages that deliver all aspects of telecom services to subscribers.
What Else Does T Stock Have Going for It?
T also has beefed up its mobile operations. It bought two major Latin American carriers in two deals worth about $4.5 billion. This is a major growth market and it’s crucial to continuing growth in the mobile services business because the U.S. market is saturated and mature, which means low growth and shrinking margins. Latin America is wide open.
In the U.S., AT&T continues to build out its internet services through high-speed fiber optic cable into a growing number of cities as well as its AirGig wireless service.
AirGig is reported to be small, cheap antennas that T puts on utility poles to send a high-speed, wireless internet signal. The company is making mileage on the fact that this will serve underserved markets (i.e., inner cities and rural areas that are more expensive to serve) per the mandate of the Federal Communications Commission.
But AirGig will do much more than that. It will be able to compete (if it works as described) with other internet providers and likely do it at a lower price point with stronger margins.
Basically, T was hunting for growth in a highly competitive market and found that by diversifying geographically and through innovation, it was able to find that growth for the long-term.
Both the DirecTV deal and the Latin American telecom deals are relatively recent, but if they produce as expected, with the full force of one of the most powerful telecom firms in the world making it happen, T stock will be an aristocrat for many years to come.
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.
