Dividend Diplomats’ Recent Buy – AT&T (T)

We weren’t kidding with our dividend stock watch lists posted earlier this month, expected dividend increases and even tweeting about how the market is opening up opportunities.  It is always exciting  when dividend aristocrats go on sale and one has capital to deploy.  Due to the frugal lifestyle that Bert & I live, we were able to strike when the stock market took a few steps back.  The end of October & early November has opened up quite a few opportunities in the dividend investing arena and what do Dividend Diplomats do best?  You called it, brother, dividend investing of course!  Let’s dive in to see our recent purchase that we both ended up buying for our respective dividend stock portfolios!

If you can’t already tell by the title or the logo, we both made individual stock purchases into the gigantic telecommunications company, AT&T (T).  Over the last 3 months, they have dropped around 13%, jacking up their dividend yield!  As one of the foundation stocks for your portfolio, this was hard to not keep on your radar.  We believe a lot of dividend investors in the blogging community are adding or creating a position for the company.  Here are a few details about AT&T (T) recently.

From their recent Form 10-Q that was filed, they reported $119B in revenues year-to-date with net income at $10.7B, slightly behind prior year’s figures.  Further, the company sat with enough cash on their balance sheet to satisfy their currently liabilities, which is always nice to see.  Additionally, T produced $29.3B in operating cash flow, spent $16.5B on capital expenditures and paid out $9B in dividends.  This still leaves approximately $4.8B of additional cash flow from operations, another positive.

Further, AT&T (T) is a dividend aristocrat and at the price points, explained below, had the Dividend Diplomat Stock Screener very excited.  The yield was approximately 5.85%, payout ratio of upper 80’s based on current performance (but the payout ratio lower based on analyst forward expectations).  In addition, having the free cash flow to allow dividend growth made this stock hard to pass up.

Lanny’s Purchase of AT&T

Of course this was on my recent watch list, with Bert & I monitoring this foundation dividend stock like a hawk.  You damn right better believe I decided to Just Go For It and make the quick decision to make every dollar count in this situation, and that I did.  Further, with Mattel (MAT) cutting their dividend this purchase helps in replacing the loss.  We were messaging each other, again, about this stock and we took the emotions and further thought out of it.  I purchased 35 shares of AT&T (T), to round out my position to ~200 shares in total of the telecommunications company in my dividend portfolio.  Based on a dividend of $1.96 per share – this added $68.60 on a going forward basis and cost me at total of $1,172.50, with no commission due to a trade credit, see below.

Bert’s Purchase of AT&T

As Lanny said above, we were talking to each other following AT&T’s every movement on the day of the purchase.  If the stock price decreased $.05, we knew about it.  If the price suddenly increased $.02, we knew about it.  Bottom line is that we were hot on the trail of AT&T and were looking to make a move.   Finally, when the price approached $33.50/share, I decided to strike.  I purchased  28 shares at $33.53/share, increasing my cost basis by $938.  After this purchase, I personally own 100.82 shares of AT&T and my wife holds 73 shares.  So the position is rapidly growing here and our combined position produces $340 in forward dividend income.  Think about that dividend re-investment!  So for those of you guessed that I purchased AT&T as the stock that I teased in my dividend income summary article…congratulations!

summary

We don’t think this purchase should have been too shocking, especially considering the fact that we have been circling this stock for over a month now.  This is why it is so important to have a stock screener to identify an undervalued stock and a watch list that will allow you to pre-screen and identify stocks that meet your investment criteria.   So that when the price drops you can act IMMEDIATELY.   While it doesn’t always work out that way, we spent the time to vet this investment decision well before our decision to purchase and knew that we wanted to add to our positions.  Then, when T finally fell to that magically price, it was a no-brainer investment decision.   Our combined 63 shares purchased this week added over $120 in income to our combined portfolios.  GOTTA LOVE IT!

What are your thoughts on our purchase?  Have you added shares of AT&T recently?  What do you think about their recent price decrease?  If you aren’t buying AT&T, what other stocks are on your watch list?

-Lanny and Bert, The Dividend Diplomats

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44 thoughts on “Dividend Diplomats’ Recent Buy – AT&T (T)

  1. Gotta love it. T has been getting tons of attention on this dip. As you know I picked up some myself last week. Although my position doesn’t come anywhere near yours, maybe in the 60 shares range. But that still generates some great dividend income to DRIP more shares long term. Great buy!

  2. Lanny and Bert,

    That was a sweet purchase. I like how you watched it and timed it to purchase when y’all felt it was right. (T) has been on my watch list since I started, but I haven’t made a purchase yet. I didn’t realize their yield was so high. That’s awesome! I’ve been thinking about (XOM) lately and wan’t to dive a little deeper into their metrics. It is a stock my mother and uncle are long in. I’ll write about them soon with their completely different directions they took with (XOM).

    Brian

    • Brian –

      Thanks for the comment and sharing this information. XOM is definitely an aristocrat and is a company to see if the metrics are sound, which they are a well run-oiled up machine, haha, literally. I think you’ll be happy with what you read, plus – they just had a small little pullback. Talk soon Brian and thanks again!

      -Lanny

    • P2035 –

      Great purchase price at just under the 6% yield, as you stated. They’ve dealt with their high debts for some time. Something tells me they have smart individuals managing that balance sheet of theirs. Keep an eye on it though!

      -Lanny

  3. Grats on the purchase, but this is one of those times when I can honestly say that it really wasn’t surprising. T seems undervalued right now and I think you made a great decision. Mulling the decision to add shares myself.

    • DP –

      Haha, much appreciate DP, as always. I hope that the government can understand the business transaction they are trying to do. There’s a lot of time and money tied into this, but I will continue to stay updated on the reports that come out, and the facts. The company is massive and their ability to pay the dividend appears sufficient, as operating cash flow is impressive as heck. Can’t believe I now have over 200 shares due to reinvestment last week! Thanks again for the comment.

      -Lanny

  4. I’ve got 13k of cash coming due end of Dec from a 3% CD and I’m keeping a close eye on T and VZ. I might just purchase out of savings right now and re-stock when the money comes due.

    • FROokie –

      Dayum, that’s some serious capital. Spread the risk across some aristocrats that have strong metrics. Take a peek at Hormel, AT&T, Cardinal Health, PG. You may find a few diamonds there!

      -Lanny

    • Dynasty –

      Thank you! The income definitely helps replace some of my Mattel dividend cut forward divies, haha. I saw a few other individuals grabbing it at a lower price, but I’ll take mine still haha. Appreciate it!

      -Lanny

  5. Great buy guys! I also managed to sneak in a purchase of 9 shares @ 32.60 for a 6% yield. 🙂

    As always love your positive vibe. I think we can describe you guys as THE motivators of the DGI community!

    • Robot –

      Damn, wow $32.60? Impressive as heck. And no way – are you guys serious?! YOU and the community are the motivators around here, come on!! So nice of you, words cannot even begin to describe, just wow. Made my weekend Robot!

      -Lanny

  6. Although AT&T was never on top of my own watchlist, I must admit that – just like you guys – I couldn’t resist any longer at these levels. So I bought my first 135 shares of AT&T. That’s nearly $265 in additional passive income per year! I’m happy!

    – David

  7. I knew it was T! I’d add some to my own portfolio but I’m already overweight on large caps and I kind of want to see how this TWX merger plays out. One good strategy if you want some T and think the merger goes through is to buy some TWX right now.

  8. Dudes,
    Big fan of this purchase, whether they get Time Warner or not. No matter the network, people will always use their tech, and there are only so many networks to use. T, along with VZ, might have short term headwinds, but long term we will be nothing but more dependent upon these networks in time. Enjoy the income!
    – Gremlin

  9. Looks like T is the new flavor of the day. Many have been watching and buying this stock as of late and I can see why. I still do not hold any telco in my portfolio but know that T and VZ are both popular names in the DGI space. I’m still not sure how this company can survive longer term. Seems like a race to the bottom in terms of pricing and offerings. Thanks for sharing. As always, I like to read about any new buys.

  10. I picked up some T in OCT. Gonna make another purchase soon don’t want the stock price of this other battered company to get up again before making a purchase. Look on the bright side of replacing Mattel’s dividend increase at least you didn’t have to replace your GE dividend.

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