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Frequent Contributor

ATT as a yield producer

 Now that my spouse has also retired we are considering adding to her small holding of ATT as a buy and hold investment. She currently hold shares in several individual stocks and CDs in an IRA and won't be needing her holdings for our current needs.

Only experienced investors reply to the current status of ATT as an investment and the security of current dividend.

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Follower ○○

Re: ATT as a yield producer

ATT is surely tempting. Full Disclosure, we own some, have for a long time. And we have considered buying more for the yield. but i keep reading about att's debt and that gives me pause! 

I probably will just watch it a while. sometime this year we will see a market slide and ATT will slide with it. Time to buy!

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Frequent Contributor

Re: ATT as a yield producer

T has continuously raised its divey each and every year for the last 35 years.  It is a divey aristrocrat, that currrently pay a 6.6% divey.


@ishcabible wrote:

ATT is surely tempting. Full Disclosure, we own some, have for a long time. And we have considered buying more for the yield. but i keep reading about att's debt and that gives me pause! 

I probably will just watch it a while. sometime this year we will see a market slide and ATT will slide with it. Time to buy!


 

ElLobo, de la casa de la toro caca grande
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Explorer ○○

Re: ATT as a yield producer

Over the past 12 months AT&T generated $43.602 billion of operating cash flow. They paid dividends of $13.41 billion during the same period.

Regards,

Lamar

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Participant ○○○

Re: ATT as a yield producer

The AT&T now is NOT the same AT&T we all grew up with... it is on a path of "growth through acquisitions" which has not played out yet. Debt burden coupled with lackluster growth in wireless and huge losses in DirecTV are concerning.

Most folks acknowledge that 6+% dividend is unsustainable given their aspirations of growth - but AT&T is between a rock and a hard place (past dividend aristocracy hamstrings them). 

I personally would not commit new money to AT&T as an investment. Chasing yields has rarely proven to be beneficial. Look around and see how many large companies pay 6% yield...

There must be a reason... don't fall in love with high yield.

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Explorer ○○

Re: ATT as a yield producer

AT&T has a lot of debt. $176.5 billion dollars. Interest costs are $8 billion, covered 4 times.

I invested in AT&T in January when it was yielding a bit north of 7%. Fully recognize the risk, but I am being rewarded for taking that risk.

I would argue that there a many companies who have piled on the debt that do not reward their owners for the risk  they have added.

So their new venture is less than successful, AT&T has .5 trillion dollars in assets. Toss out growth hungry  management and replace them with those who want to build a sound company.

Total  AT&T collapse will not put me in the bread line. Do your own due diligence.

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Frequent Contributor

Re: ATT as a yield producer

Outandabout,

We’ve held AT&T for years (decades), and as mentioned by El Lobo, it has raised it’s dividend every year for well over 30 years. BUT, the dividend increases have slowed to about the inflation rate (if that high), so you’re really NOT getting true “growth” in your dividend. T has piled on a LOT of debt recently, but they seem to be trying to pay it down, or at least that’s what they are doing “now”. As long as they continue to pay debt down, they should be fine, but if they do another acquisition, take on new debt, etc., I may SELL. Debt level right now is pretty high, so I am watching that and willing to hold as long as they continue to pay it down.

If you do buy some, I would limit your risk to no more than 1-2% of portfolio, monitor the debt levels and insist they continue to pay down debt. I also would wait for a lower “entry” price, me personally I have a limit order for $29/ share in place. It will probably NOT produce much of a capital gain, I’m looking at T (right now) as more of a “high yield” bond (that is more volatile than most bonds). Willing to hold AS LONG as they continue to pay down debt. As usual, do your own due diligence!

Win

Win
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Follower ○○○

Re: ATT as a yield producer

I don't mean to be rude, but if your wife already has a "small holding" of T, aren't you already familiar with the current status of the corporation?

T is one of my larger positions.  I think the debt issue is often overstated.  The executives have indicated that debt reduction is one of their more immediate goals, and they appear to be executing the debt reduction plans.  I personally do not believe the dividend is in jeopardy of a cut.

That being said, T is essentially a new corporation after the acquisition.  The real question is if they can effectively combine the two companies to become more profitable combined than they were separately.  If you trust that their vision is correct and that they can execute it, then good.  Some investors have expressed doubts in the CEOs abilities, citing the DirecTV acquisition as an example.

I own T in my Roth; my wife owns VZ in hers.  If you're hesitant to add to the T position, you could always consider VZ.

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Frequent Contributor

Re: ATT as a yield producer

I’ve taken the same approach as “Wilbodave”, my wife owns T and in my brokerage account, I own VZ. We “spread” a bit of the risk around that way. I personally think T will do well with their addition of all the entertainment “assets” from Time Warner, as long as they continue to pay down debt. So far, it looks as if they are sticking to their plan to pay off debt, and I’ll hold he company and continue to collect a pretty nice yield. Have an order to buy more if T corrects down to $29/ share.

Win
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