Roger Conrad, in a leading expert on utility stocks; the editor of Conrad's Utility Forecaster is al...
You Really Can't Beat This Income Pick
04/09/2012 8:45 am EST
If you're concerned with volatility and the lack of stability of some johnny-come-lately dividend payers, this stock should be perfect for you, writes Amy Calistri of The Daily Paycheck.
It pays more dividends than any other company in America. In total, it distributes over $2.5 billion every quarter, or about $10.2 billion each year.
And this isn't some special one-time dividend. This company has paid a dividend for decades...and raised payments for 28 consecutive years. That includes through the 2008-2009 downturn.
Right now, the stock pays a 5.6% yield. But dividends are growing quickly. In the past decade, the dividend payment is up 72%.
That dedication to dividends has paid off. Today, AT&T (T) pays more in dividends than any other company.
I don't think I need to tell you too many details about AT&T's business for you to know where those dividends come from. As one of the nation's largest telecoms, the company earns a bundle in recurring revenue for providing wireless, digital cable, and Internet services.
But can the company continue to pay its massive dividends...and continue to grow them?
AT&T certainly seems confident they can. In fact, in January the company announced a $9 billion buyback plan (equal to about 5% of shares outstanding). Reducing the share count will allow for more flexibility in meeting the dividend.
Meanwhile, the rise of smartphones has business booming. Last quarter, smartphone activations were up 60% year-over-year...helping lead to a 10% rise in wireless revenues.
But the truth is, AT&T's yearly results were down in 2011 compared to 2010. In fact, the company saw net income of just 66 cents per share for the year—well below the $1.76 per share it pays in dividends.
The main reason for its low earnings is one-time events that occurred in the fourth quarter—pension charges and a break-up fee from its failed buyout of T-Mobile. Taking out those one-time expenses, the company earned $2.20 per share—more than enough to cover the dividend.
There's no doubt AT&T is facing some headwinds. Large debt and a capital-intensive business take up money that could otherwise be used for dividends.
But there is also little doubt the company is dedicated to paying—and increasing—dividends to its investors. After all, you don't pay more than $10 billion a year in dividends if you aren't serious about putting money in your investors' pockets.
Related Articles on INCOME
If you want to profit from huge trends remaking society, you need to zero in on megatrends like expl...
Omega Healthcare Investors (OHI) is the largest publicly traded real estate investment trust (REIT) ...
Are the dark days over for MLPs?, asks Robert Powell. Here, the editor of Retirement Daily offers a ...