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AT&T
#1
Hello friends,

What are your thoughts on T? I am seeing it to be at a good price to buy, but I wanted to check your opinions before I buy.

It seems to be in decline, but is there a string future for it?

Thanks
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#2
T is never going to be a growth stock and it has under performed the market year in and year out. It will always act like a bond. So if your happy just to collect the dividend and make $200 a year in dividends per 100 shares then so be it. For the last 5 years its performance is at 3.1% compared to the S&P 500 13.40% annual return. If you take away the dividend it would be down every year lol.

But with many other names being down big the last 2-3 months; to me there are way better opportunities out there to buy. I can name at 20 stocks that are buys at the moment that gets you both growth and a 2%+ dividend.

That's just my opinion. I'm sure others will think differently.
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#3
(07-11-2018, 03:50 PM)divmenow Wrote: T is never going to be a growth stock and it has under performed the market year in and year out. It will always acted like a bond. So if your happy just to collect the dividend and make $200 a year in dividends per 100 shares then so be it. For the last 5 years its performance is at 3.1% compared to the S&P 500 13.40% annual return. If you take away the dividend it would be down every year lol.

But with many other names being down big the last 2-3 months; to me there are way better opportunities out there to buy.  I can name at 20 stocks that are buys at the moment that gets you both growth and a 2%+ dividend.

That's just my opinion. I'm sure others will think differently.

Thanks for the info.

Would you please list those stocks in mind. I have some funds and would like to make good use of. Thanks.
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#4
Sure that list consists of APD, AFL, MO, CVS, WBA, RTN, CCL, OKE, CSCO, BK, MCD, ABBV, UNH, OXY, CVX, UNP, AMGN, UPS, GILD and JNJ.

All these stocks pay at least a 2% current or forward yield and have growth. These are all my best idea for 2018 and beyond. Some are way off there lows.
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#5
I've been accumulating some T at these prices. I agree that there is no fast growth story there, but I am very happy to lock in a boring 6+% yield for a chunk of my portfolio. Tim MacAleenan is bullish on it too right now, and feels positively about the merger. I value his opinion a lot.
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#6
(07-11-2018, 04:59 PM)divmenow Wrote: Sure that list consists of APD, AFL, MO, CVS, WBA, RTN, CCL, OKE, CSCO, BK, MCD, ABBV, UNH, OXY, CVX, UNP, AMGN, UPS, GILD and JNJ.

All these stocks pay at least a 2% current or forward yield and have growth. These are all my best idea for 2018 and beyond. Some are way off there lows.

Thanks!!
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#7
(07-11-2018, 05:21 PM)Kerim Wrote: I've been accumulating some T at these prices. I agree that there is no fast growth story there, but I am very happy to lock in a boring 6+% yield for a chunk of my portfolio. Tim MacAleenan is bullish on it too right now, and feels positively about the merger. I value his opinion a lot.

Thanks for this!
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#8
This depends on two things:
First, as already discussed, are you happy with a safe company offering a 6%+ yield with slow growth? Because that is essentially what T is. Good yield, (and the expectation is that div will increase only by $0.01 once per year for the next couple of years at least)

Secondly, I'd look at how you view the strategy with the new companies that they've acquired. TW was of course the biggest but they also bought a digital marketing platform and some sort of a cyber security company in the last month or two. They are definitely moving away from simply offering wireless network connections. If the move works out well, I see amazing potential.

I don't mind buying more at these prices, that dividend is lovely. :p
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#9
I like AT&T a lot at a 6.3% yield. The payout ratio has steadily been dropping with the 2% raises in recent years, and with the TWX acquisition now complete, I'm hopeful that EPS growth will pick up and the company can begin paying down some debt.

Here is some commentary on the dividend from Randall Stephenson at a recent investors conference:

Quote:Comfort of the dividend? We came into this year and committed that we would do somewhere in the order of $21 billion of free cash flow. That's before Time Warner. And so yes, we took the drop on video in 2017. The cost structure work that Donovan and team are doing, it's a profitability equation. That's not what keeps me awake at night. It's how do you work this transition of the products from the traditional linear to the stream products. But we are still committed to $21 billion range of free cash flow for the year. We also -- if you close Time Warner, the $21 billion goes up by order of magnitude. To make your own forecast, I have no better intelligence than you on what that is for the rest of the year, but $23 billion, $24 billion of free cash flow. We had 3 or 4 years ago -- 4 or 5 years ago as a result of a lot of the investments we had made in acquisitions, the dividend payout had moved up to a level that, candidly, I wasn't comfortable with. So we have been on an aggressive effort to work the dividend payout ratio down. Mission accomplished.

We're at now a level in terms of dividend payout ratio that I'm very, very comfortable with. And with Time Warner, it goes down even lower. In fact, it gets to levels we haven't seen in a long time with Time Warner. So any concerns with the dividend, I kind of set those aside. The ability to finance the dividend is terrific. With Time Warner, we will lever up to acquire Time Warner. Our debt-to-EBITDA ratio gets up to levels that you'd like to get worked down. By the first year after Time Warner closes, we'll be down to 2.5x EBITDA -- debt-to-EBITDA. Within 4 years, back to our historical levels. So the financial profile of the business is good. Shoring up the video profitability, we feel really good about that. Good line of sight to doing that. Cash flows continue to be strong and feel really good about where the business is.
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#10
Thanks gentlemen, that's very helpful.
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