Symbol: T
Share price: $39.48
Dividend yield: 5%
Consecutive annual dividend increases: 33
Forward P/E: 13
Analysts’ opinion: 5 strong buy, 1 buy, 12 hold, 0 underperform, 0 sell
The telecommunications services sector is well-known for dividends, and AT&T offers one of the best all-around yields in the space.
The company has paid uninterrupted dividends since 1984 and has raised its payout annually for more than three decades. Moreover, AT&T’s dividend routinely makes it one of the highest-yielding common stocks on the market – well above the 2% yield of the S&P 500. But unlike telecoms like Windstream (WIN) and Frontier Communications (FTR) that have had to cut their payouts over the past few years, AT&T’s dividend is well-backed by the company’s high cash flow.
Although phone service remains AT&T’s core business, the company is moving aggressively into pay-TV and content production with acquisitions such as DirecTV and a pending deal to buy Time Warner – an entertainment giant whose lineup includes CNN, HBO and the Warner Bros. movie studio. Analysts aren’t certain the deal will go through because of antitrust issues. But even without Time Warner, AT&T still should grow profits by 3.5% in 2017 and nearly 2% in 2018.
Add in the healthy dividend, and this Dividend Aristocrat’s forward P/E of 13 looks like a pretty good deal in a pricey market.
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Source: Kiplinger
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