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Why not AT&T

If a retiree was looking for a good income stream, why wouldn't they want to just put a large chunk of cash into AT&T for the high dividend they pay. 

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Re: Why not AT&T

I added some more T yesterday for my income side, but with their large debt I would not load up the wagon ! Looked at buying more UTG a util. type cef, but the yield was about the same and thinking down the road may get some small growth over time and more dividend increases with T.  For me I like the 3 to 4 percent type stocks that raise their dividend each year. 7 percent is not in my feel good range! :).

Anytime a stock yield gets in that range I look at them with a 50% dividend cut and then ask myself can I live with that if I buy it. Who knows we may look back in a few years and kick ourselves for not buying more! :)

Copie 

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Re: Why not AT&T


@Rascal wrote:

If a retiree was looking for a good income stream, why wouldn't they want to just put a large chunk of cash into AT&T for the high dividend they pay. 


If your portfolio consists mainly of funds, then you can afford the risk of holding only one or two funds, given the risks of diversification.  But T is an individual stock, so most everyone recommends a maximum of 5% or so holding in individual stocks, which translates to a 20-25 individual stock portfolio as being somewhat 'optimum' for handling diversification risks.  SO, ifn in your case, a 'large chunk' is 5%, or less, of your portfolio, T would be a good choice, at least IMO.  But if that large chunk is 50% of your portfolio, I'd suggest you reconsider!  8-)

ElLobo, de la casa de la toro caca grande
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Re: Why not AT&T


copie>"I added some more T yesterday for my income side, but with their large debt I would not load up the wagon !"

Fully agree, copie! It is encouraging to see smart investors still buying, but not loading up on one stock.

Best to keep the percentage of any individual stock low. I currently have 8-10 stocks as part of my IRA, but even then the total of individual stocks doesn't represent a large percentage of my portfolio.

I've held AT&T along with a number of other individual stocks in different portfolios. I've traded T on occasion, but felt it had a place in my portfolio as long as my purchase price was good and the dividend wasn't cut. Over the past several years there has been posts about AT&T cutting the dividend because of their debt but that has been just noise from the sidelines.

 

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Re: Why not AT&T


@copie wrote:

 For me I like the 3 to 4 percent type stocks that raise their dividend each year. 7 percent is not in my feel good range!

Anytime a stock yield gets in that range I look at them with a 50% dividend cut and then ask myself can I live with that if I buy it.

Copie 


 

+1

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Re: Why not AT&T

I've come around a bit on AT&T.  I almost sold out with its tanking entertainment business, underwhelming HBO MAX debut, and high debt, but it appears come hell or high water they are going to pay that dividend. If they continue paying it into 2021 without a reduction, I'll likely add more.

However, their headwinds make this a poor candidate for capital appreciation--if that's your thing.

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Re: Why not AT&T

I own T.  There are several stocks I was more concerned about dividend safety with and dumped months ago, including REITs WELL, LAMR, O, & SRC.  

For now, even with Covid, it seems their payout ratio may tick up to 60%ish from the low 50's, at least as of their last report.  Admittedly, the longer Covid makes Warner Media struggle on the movie and TV production side, the movie exhibition side, and the sports exhibition side for TNT & TBS, the more pressure they may feel.

Still, you have the steady hands at Elliott Management strongly involved and having approved the ascendance of John Stankey to the CEO post after a comprehensive review.  They will be there to watch over his shoulder.

They plan further asset sales and debt pay downs as of last report.

They are rated A++ for financial strength, which is Value Line's highest rating.

M* telecom analyst Michael Hodel recently commented in the quarter end update on the sector:

"Of the two telecom giants, AT&T is more attractive, trading at an 18% discount to our fair value estimate and providing a 7% dividend yield that we believe is sustainable. AT&T has made numerous strategic missteps over the past few years, but we expect it will adhere to a more prudent path under new CEO John Stankey."

It's not my highest conviction holding and needs to be monitored for fundamental deterioration, but it doesn't seem crazy to own some as part of a diversified portfolio.

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Re: Why not AT&T

I have been owned T for 30 yrs, max 2200 shares, but 1200 now, their dividend is covered all my phone bill, in and out around 1000 shares to capture the capital again, but I have not buy T again because 16.7 billion bonds...in this sector I hold T, VZ and BCE

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Re: Why not AT&T


@unbiased2020 wrote:

I've come around a bit on AT&T.  I almost sold out with its tanking entertainment business, underwhelming HBO MAX debut, and high debt, but it appears come hell or high water they are going to pay that dividend. If they continue paying it into 2021 without a reduction, I'll likely add more.

However, their headwinds make this a poor candidate for capital appreciation--if that's your thing.


Agree on all points. I may buy more if it goes down some.

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Re: Why not AT&T

These were my thoughts when I asked this question. Might be wrong with a question like this but that's why I am here. I'm looking at the cash part of my investments. Getting hardly any yield on any cash positions like CD's, Savings accounts, Short term bond funds, I thought well why not put your cash position in a company like AT&T which at the moment pays a juicy dividend, and even if let's say they cut there dividend in half which I don't think is likely, I would still be yielding more than if I was in some of the other cash positions I mentioned above. So what I'm thinking is let's say I put $10K in T and get about 6.5% yield, even if the dividend was cut in half I would be getting 3.25% yield on the $10K, better than the other cash positions mentioned before. I'm sure I'm probably missing something and again that's why I'm here.

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Re: Why not AT&T

T @ 29.70 == 7% div

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Re: Why not AT&T

If I am not wrong,  Federal Bank owns 16.7 billion of AT&T bonds, so looking at 2008-2009 , then figure it out

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Re: Why not AT&T


@vubao6868 wrote:

If I am not wrong,  Federal Bank owns 16.7 billion of AT&T bonds, so looking at 2008-2009 , then figure it out


Where did you come up with $16.7B in T Bonds? On June 28 fed announced that it had purchased 426M of Corp bonds including T. You need to check Your numbers.

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Re: Why not AT&T

I agree with others, good stock to hold as PART of a diversified portfolio, but I’d limit your position size to 5% or less. We’ve owned T for years, since 1992, and have periodically added when at the lower end of yearly range. Would add more if falls below ~$29 per share. Don’t expels the too much capital gains though. Also own VZ, sort of a duopoly.

Win
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Re: Why not AT&T

In the Fortune 500 companies list published in May 2020, AT&T ranked #9. 

So, AT&T is a great company. But the dilemma is that not many (if any) of the top Fortune 500 companies pay 7% dividend. Verizon does not pay that kind of dividend which is a twin separated at birth.

Something does not compute - could it be that T has become a victim of circumstances where it can NOT cut the dividend although that is what the doc has prescribed? How many things have to go right so its stock also moves up? Is it a value trap?

Tough situation for T. I am not able to buy more when it does not compute in my head.

How would you feel if you get 7% dividend but the stock drops 15% over the next 12 months? Enigma...

 

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Re: Why not AT&T

 

 Why not AT&T? A better question is why AT&T.

 

                         T                     VTI

15 year             5.98%             9.03%

10 year             7.28%           14.08%

5 year              2.55%            10.51%

3 year             -1.01%            11.17%

1 year            -5.10%               7.28%

YTD              -19.32%              -.97%

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Re: Why not AT&T

Don't forget AT&T goes EX-Dividend 7-9-20. If you only own a few shares it may not make a difference if you sold now(today) but if you held 8735 shares …………...well, you get the idea. 

A diverse portfolio allows investors to hold stocks like AT&T. Most of us hold many solid MFs as core-holdings, but also have room for other investments in their portfolios or trust. Not sure why VTI enters into this thread, but there will always be some silly protestor out there telling the world we are all wrong except him or her.

Back to AT&T please.

 

 

 

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Re: Why not AT&T


@outandabout wrote:

Don't forget AT&T goes EX-Dividend 7-9-20. If you only own a few shares it may not make a difference if you sold now(today) but if you held 8735 shares …………...well, you get the idea. 

A diverse portfolio allows investors to hold stocks like AT&T. Most of us hold many solid MFs as core-holdings, but also have room for other investments in their portfolios or trust. Not sure why VTI enters into this thread, but there will always be some silly protestor out there telling the world we are all wrong except him or her.

 


 

 Don't see where anyone told anybody they were wrong. The cost of owning AT&T over the years for the yield has been a costly endeavor. There is no better way to demonstrate those costs than to compare AT&T returns to a benchmark; that makes it easy for members to understand the cost of stretching for yield.

                             T                     VTI

15 year             5.98%             9.03%

10 year            7.28%           14.08%

5 year              2.55%            10.51%

3 year             -1.01%            11.17%

1 year            -5.10%               7.28%

YTD              -19.32%              -.97%

 

Does it make sense to give up 7% per year for a decade for yield? Do the math.

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Re: Why not AT&T


@Rascal wrote:

If a retiree was looking for a good income stream, why wouldn't they want to just put a large chunk of cash into AT&T for the high dividend they pay. 


Why not? I consider T to be a bond proxy that makes regular payments just like a bond with the advantage of being taxed at either 15% or 0. High dividend stocks replace the 20% of my investments that were invested in bonds when yields were 6%+. I don’t worry about future appreciation since I use T and other high dividend stocks to cover expenses which eliminates the need to sell shares when stock prices decline. 70% of my investments are in Growth stocks and funds such as FAANGM, QQQ, recovery stocks such as WMT, HD, Low, pharma. Any appreciation in my dividend stocks will be inherited by my kids with stepped up basis as well as lower taxed dividends.

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Re: Why not AT&T


@SteadyEddy wrote:

In the Fortune 500 companies list published in May 2020, AT&T ranked #9. 

So, AT&T is a great company. But the dilemma is that not many (if any) of the top Fortune 500 companies pay 7% dividend. Verizon does not pay that kind of dividend which is a twin separated at birth.

Something does not compute - could it be that T has become a victim of circumstances where it can NOT cut the dividend although that is what the doc has prescribed? How many things have to go right so its stock also moves up? Is it a value trap?

Tough situation for T. I am not able to buy more when it does not compute in my head.

How would you feel if you get 7% dividend but the stock drops 15% over the next 12 months? Enigma...

 


What benefit would result from a cut in the dividend which would justify a decline in the price of the stock? A 1/3 reduction in dividend would only save $5B a year and would not move the needle much in reducing the $147B long term debt.

Please explain why you think the doctor has prescribed a dividend cut? Do you think the price of T would rise if the dividend cut reduced the long term debt?

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