Is AT&T Inc. Stock Still Worth Its 5%-Plus Dividend?
January 10, 2018 – by Richard Band
AT&T Inc. (NYSE:T) stock is having a tough day. Actually … T stock has had a tough quarter.
In its most recent quarter, AT&T announced that it lost 90,000 subscribers and that its hopes for a boon of new subscribers from its pending Time Warner Inc (NYSE:TWX) deal may be more optimistic than previously anticipated.
But T stock has dropped almost 2% in the past five days and 5% year-to-date.
With all the evolution going on in the cable space and the competition in the mobile space, the question becomes, is AT&T stock still a good long-term stock to hold to take advantage of the transition, or is it becoming a dinosaur?
Is T Stock Dying Off?
The simple answer is, AT&T stock has had a tough quarter and an especially tough week, but if you’re a long-term investor looking for a solid stock that will carry you through good times or bad, T is still a stock to consider.
Remember, the company is a Dividend Aristocrat, having delivered and grown its dividend for the past 33 years. Right now, that dividend sits at a solid 5.5%.
Because of the shift in strategies for T and its main rival Verizon Communications Inc. (NYSE:VZ), the past couple of years have been a wild ride for major telecommunications carriers as they have begun building for the future.
Both AT&T and VZ have acquired content and distribution assets to add to their telecom business. The goal is to offer far more than simple phone plans. Eventually, that market becomes saturated and you’re no longer growing your business but trying to grab customers from your competition, which doesn’t help long-term survival.
VZ has focused more on the web side of things; whereas, T’s acquisition of TWX would add huge amounts of original content to mobile, just as millennials are cutting the cord.
Bottom Line on AT&T Stock
This could be a pivotal moment for AT&T. And given the fact that T is essentially the company that started the whole telecom revolution in 1876 with Alexander Graham Bell’s discovery of telephony, it has proven time and again that it can take advantage of sea changes in technology.
Also remember that T has a $222 billion market cap. This is a massive company and its sheer size means it can weather storms that would sink other companies. Its mergers and strategic partnerships also show that it will spend when it needs to, and it has deep enough pockets to pull off significant deals.
One of the weights holding the stock down is regulatory approval for the TWX merger. Once this looks like it’s going through, T stock will gain some significant momentum. The problem now is, the potential head of the Department of Justice’s Antitrust Division who will rule on the deal … Makan Delrahim, has yet to be confirmed by Congress.
Use this uncertainty to your benefit and grab a blue-chip like AT&T stock on sale.
Richard Band’s Profitable Investing advisory service helps retirement savers outperform the market without losing a minute of sleep along the way. His straightforward style and low-risk value approach has won seven Best Financial Advisory awards from the Newsletter and Electronic Publishers Foundation.