I originally planned on posting the second part of Monday’s post on the additional benefits of working overseas. I wanted to include some photos to make it a little more personal, but I’m not at my home computer so the last part of the series will have to wait for a week or two. Hopefully the improved quality will be worth the delay.
Let me start by saying that I am a novice investor. I have just over a year of investing experience and no formal education in any form of finance that gives me any qualification in evaluating stocks. I do however, have a natural curiosity for seeking the value in things and for the past year I’ve directed that curiosity to my investing activities. I share these confessions with you because I think it is only fair that I share both my weaknesses and my strengths with you. This clears any false expectations from either of us and sets the ground work for a solid exchange of ideas. I also want to warn the reader that I will be considering the “softer” qualitative analysis and not the “hard” quantitative analysis in this post. Both are needed as part of a due diligence plan, but to be perfectly honest with you the quantitative approach is not my strength and others do a remarkable job in this area. Now that the introductions are out of the way, lets take a look at why I’m a shareholder of T.
As stated in the title, I believe T is a solid foundational stock. Part of my investment strategy is made up of dividend investing. This gives me an anchoring point in which to ground my portfolio. This gives me not only an income stream, but less volatility to the mix of my holdings. This is psychologically valuable as it is much more calming to see modest price fluctuations than violent ones. T has done a wonderful job in the past year of offering the trifecta of income, preservation of capital, and a modest amount of price appreciation.
As happy as I’ve been with T’s performance in the past year, the company is not without potential problems. Being a mature company there is not going to be exceptional growth in the future, but I believe an investor buys T for its income not its growth prospects. This is not a bad quality considering that with a relatively stable subscriber rate and consistent revenue generation the company should be able to continue paying and increasing dividends paid to its shareholders.
Last year was not a stellar year for T and its management team. The failure of its attempt to acquire T-Mobile was costly not only in monetary terms, but the time and energy spent by company execs in attempting such a feat to begin with. This type of activity by a company’s management is not something that investors are likely to be happy about, I know I’m not. The more troubling aspect of this story is what this failed acquisition has cost T in terms of developing and improving its network infrastructure in terms of rival Verizon (VZ). According to a Wall Street Journal article this has potentially set T back a year on network development compared to where VZ now is. In a world in which customers are seeking fast and reliable connectivity with their mobile devices this has the potential to hurt T if they are not committed to meeting the demands of customer needs.
Despite some of these shortcomings I still hold shares of T and will continue to add shares on dips in the stock price. All companies misstep from time to time in the management of their affairs. I think T will continue to do what it has done for its one hundred plus year history, which is manage government regulation, stay competitive in its market and respond to the changing technology of the wireless industry. In doing so is should be able to reward me with a steadily increasing stream of income, capital preservation and modest stock price appreciation.
If you are curious to know more about T here is a good write-up on the stock that covers more of a quantitative analysis and makes a nice supplement to what I have stated here:
Any other T owners out there? How has the stock treated you? Leave me a comment and share your experience
2 thoughts on “AT&T- A Foundational Stock”
I’ve been an AT&T stock holder since 2010. During this time I’ve seen two small dividend increases in amounts that were predictable. The price of the stock is stable. Usually it has been around $28-29 and has traded mostly between $27 – 32. It is on the high end right now, which isn’t surprising considering the market rise. The stock shot up when plans of the T-Mobile merger were announded. It went back down when the deal was nixed. Overall the stock has met my expectations. I like the yield plus it is one of the safer plays in the telecom sector.
What initially attracted me to this company was observing the world around me. I noticed people are infatuated with smart phones. They must have the latest gadgets and the best data plans. I have an ancient flip phone, my friends and colleagues don’t understand (I don’t care, I’m proud of it). I asked around and discovered people are willing to pay rediculous amounts of money for smart phones and data plans. I wanted to be an investor in a company that can capitalize on this.
AT&T has been solid. I don’t expect massive price appreciation, but have enjoyed the dividends with yearly increases. Right now my AT&T position is overweight, I’m not purchasing more until the rest of my portfolio catches up. I also think VZ and VOD are worthy candidates in the sector.
I opened my first position in T in April of last year and added to it later in the year. I’m like you; will add more when it dips a bit. I’m looking at VOD right now and have been for several months. I like it for it’s international exposure as well as the fact that it owns a healthy percentage of VZ Wireless. If/when I start a position in VOD that will be enough telecoms for me right now. I already have enough exposure to the sector with TEF and T, adding VOD would be plenty. I’m bullish on this sector though. As you mention, the popularity of wireless is crazy and it shows no sign of stopping. I don’t have a cell phone myself (acutally I do, but it’s a pay-as-you-go phone I use when traveling) but I will gladly be a stock owner of such companies 🙂