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 10-15% 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) synergies from Leap Wireless
acquisition,
(2) competitive advantage from having the best
Internet speeds in industry,
(3) new product [service] innovations,
(4) acquisitions,
(5) share repurchases.
Negatives:
(1) competition from Voice over Internet and cable
offerings,
(2) spectrum crunch in wireless market,
(3) aggressive pricing by competition,
(4) highly regulated industry.
T is rated A++ by Value Line, carries a 41% debt to equity
ratio and its stock yields 5.4%.
Statistical Summary
Stock
Dividend
Payout # Increases
Yield Growth Rate
Ratio Since 2004
T
5.4%
4%
67
10
Ind Ave
3.6
5*
61
NA
Debt/
EPS Down
Net Value Line
Equity
ROE Since 2004
Margin Rating
T
41%
15%
3
11% A++
Ind Ave 44
11
NA
8
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 redline) and the November 2008
trading high (green line). Long term, it
is in an uptrend (blue lines).
Intermediate term, it is in an uptrend (purple lines). Short term, it is in a trading range (brown
lines). 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 $30; the lower boundary of its Sell
Half Range is $45.
No comments:
Post a Comment