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!
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