AT&T is one
of the world’s largest telecommunications companies. The company has grown its dividend at a 5%
pace over the past ten years (profits have been flat) earning approximately
10-12% return on equity. T went through
a rough period (2008-2011) as the growth of its traditional wireline business
slowed and margins came under pressure.
Looking forward profits should regain momentum as a result of:
(1) momentum in wireless businesses,
(2)
building the most technologically advanced digital
networks systems in the industry. It
will include voice, video and internet in a vast wireline (U-verse) and
wireless infrastructure and has resulted in increased penetration of both the
business and household markets,
(3)
acquisitions,
(4)
share repurchases.
Negatives:
(1) intense competition,
(2) losses in
wireline business,
(3) highly
regulated industry.
T is rated A++
by Value Line, carries a 40% debt to equity ratio and its stock yields 5.3%.
Statistical Summary
Stock Dividend Payout # Increases
Yield Growth Rate Ratio Since 2004
T 5.3% 4% 68 10
Ind Ave 3.6 6* 62 NA
Debt/ EPS Down Net Value Line
Equity ROE Since 2004 Margin Rating
T 40% 15% 3 11% A++
Ind Ave 45 12 NA 7
NA
*many companies in T industry do
not pay a dividend
Chart
Note:
T stock made good progress off its March 2009 low, quickly surpassing the downtrend
off its May 2008 high (straight red line) and the November 2008 trading high
(green line). Long term, the stock is in
an uptrend (blue lines). Intermediate
term, it is an uptrend (purple lines).
Short term it is in a trading range (brown line). The wiggly red line is the 50 day moving
average. The High Yield Portfolio owns
a 75% position in T. The upper boundary
of its Buy Value Range is $31; the lower boundary of its Sell Half Range is
$45.
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