August 16, 2018

AT&T: Quality & High Yield


Dividend growth investors like high yielding stocks because they offer more income. When it comes to these types of investments, investors want to be sure that the dividend is safe. Stocks with yields above 5% can be a red flag to as there maybe heightened risks of dividend cuts in the future. Generally, these companies have elevated payout ratios, making future increases unlikely unless earnings improve significantly or the company has to take on debt to pay for the dividend. Neither of these cases is ideal and investors should avoid these stocks. If earnings were to experience a significant decline, the dividend could very well be at risk.

There are some companies, however, that pay a healthy dividend yield that is well protected, allowing investors to have their cake and eat it too. Some companies offer both a high yield and a low payout ratio that reassures their shareholders that the dividend is not only safe, it can increase in size over time. Let’s examine AT&T’s (T) business, recent quarterly report and dividend history to see if the telecom giant is an appropriate high yield investment.







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1 comment:

  1. I'm certainly a fan of AT&T. And it's true that a high yield can be a red flag. Thanks for sharing the analysis collection, and thanks for including me in your other blogs section. Much appreciated.

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