I recently increased my position in AT&T. I primarily did this because of the pending merger with Time Warner, which went through. Even though the stock is down right now, I feel that this stock has room to move toward the upside. Today I would like to discuss why I feel AT&T is a good stock to own.
Dividend aristocrat. AT&T has increased its dividend for over 25 years. In fact, it has increased its for 34 years and counting. As an income investor, I love this stock. It is yielding over 6% right now. Even if the stock price increases, it will still stay around 5%. More importantly, AT&T can cover their dividend.
Potential growth. With the recent merger with Time Warner I feel that AT&T has an opportunity to grow. What I like about this merger is the fact AT&T will own Warner Bros., HBO and Turner. This new revenue will certainly help their bottom line. Besides, AT&T owns DirectTV and having Time Warner only makes it a more powerful company. I do, however, believe they need to manage their debt better, which is around 180 billion.
Good price point to get in. I have not seen AT&T trade this low is quite sometime. After analysts have time to digest the merger, I feel the price per share will increase. Robert Riesen’s article “AT&T: The Best Dividend Stock Of All Time Now Trades Cheap” is a great piece and I encourage everyone to read it. He contends that a 52% upside could be in store for the company. I am not convince of that, but I do feel it could increase 20% to 25% within the next year.
If you are a long-term investor and want to own a solid income stock, I feel AT&T might be right for you. I will probably continue increasing my position if the price stays in the low 30s. Having this company in your portfolio is a no-brainer in my humble opinion. So, what are you thoughts about this company?