The current and simplified company structure is show below (source: Kinder Morgan presentation):
New Blog Posts
Let’s dive into the links that caught my attention this week.
Updates from My Portfolio Holdings
- [ADM] ADM beats earnings, revenues dip; EPS $0.77 vs $0.46 from same period last year
- [AGU] Agrium beats by $0.24 – EPS $4.34
- [BCE] BCE reports EPS of $0.82 vs estimated $0.84; revs in-line
- [CGX.TO] Cineplex Q2 revenues up, earnings down – lack of blockbusters blamed
- [GE] GE to invest $2B to boost African energy, infrastructure
- [GE] GE upgraded to Outperform by Bernstein; PT raised from $29 to $33
- [IPL.TO] Inter Pipeline reports a strong Q2; FFO up 25% from last year; revs up; income up
- [MDT] Medtronic receives FDA approval for quadripolar lead devices
- [WFC] Wells Fargo eases lending standards for jumbo mortgages
- 5 myths of Findependence by Findependence Day
- 500-year plan for children, grandchildren and the world by Paul Merriman via Market Watch
- Do you predict future profits? by Income Surfer
- How correlation affects your retirement portfolio by Tactcial Options via Market Watch
- Jeff Gundlach on interest rates from Business Insider
- Ontario’s secret pension report? by Pension Pulse
- Patents that kill from The Economist
- Pension income splitting for Canadians from Invesco
- We are all factor investors by Patrick O’Shaugnessy
- Why options mean freedom when it comes to retirement by Boomer & Echo
- 6 stocks with a high possibility to double dividends by Dividend Yield via TheDiv-Net
- Energy sector dividend stocks by Dividend Life
- How a two-sided dividend portfolio can achieve both dividend income and growth by Dividend Mantra
- I’m avoiding these two stock sectors by Income Surfer via Seeking Alpha
- Is all dividend growth equal by Dividend Life
- [AFL] Aflac Dividend Stock Analysis by Pollies Dividend
- [AXP] American Express Dividend Stock Analysis by Dividend Diplomats
- [CLX] Clorox Dividend Stock Analysis by Dividend Growth Stocks
- [CSX] CSX Corp Dividend Stock Analysis by F.A.S.T Graphs via TheDiv-Net
- [GNTX] Gentex Corp Dividend Stock Analysis by Dennis McCain
- [DEO] Diageo Dividend Stock Analysis by Dividend Diplomats
- [JNJ] Johnson & Johnson Dividend Stock Analysis by Income Surfer via Seeking Alpha
- [JNJ] Johnson & Johnson Dividend Stock Analysis by Dividend Growth Investor via Seeking Alpha
- [JNJ] Johnson & Johnson Dividend Stock Analysis by Pollies Dividend
- [UHT] Universal HealthRealty Income Trust Dividend Stock Analysis by Dividend Growth Stocks
- A Frugal Family’s Journey
- Captain Dividend
- Dear Dividend
- Dividend & Whisky
- Dividend Diplomats – Bert, Lanny
- Dividend Dream
- Dividend Growth Stocks
- Dividend Hawk
- Dividend Life
- Dividend Mantra
- Dividend Mongrel
- Dividend Vet
- FI Fighter
- Finance Journey
- Financially Free By Forty
- Freedom 35 Blog
- Hello Suckers
- Million Dollar Journey
- My Dividend Growth
- My Dividend Pipeline
- Passive Income Pursuit
- Pollies Dividend
- Pulling Ourselves Up
- Retire Before Dad
- Starting From Zero
- The Passive Income Earner
- The Stock Fox
Corporate Profile (from Yahoo Finance)
AT&T is a Dividend Aristocrat & Dividend Champion having raised dividends for 30 years in a row. The stock is a high yielder (current dividend is 5.31%) and as a result, the dividend growths are comparatively smaller. The 5-yr dividend growth rate (DGR) is 2.4% and 10-yr DGR is 4.9%.
Recent Buy Decision
Investing in AT&T bolsters my portfolio with more exposure to the telecom sector – which I am bullish on. The company is the leader in the telecom world, but the current environment provides for some interesting points. Some of the factors that contributed in my decision to initiate this position.
- Dividend income – AT&T provides great current income with prospects of dividend growth in the future.
- Dogs of the Dow – Some people use this investing strategy to beat the market. While my main goal is not to beat the market, this strategy provides some visibility into the under-to-fairly valued stocks in the DJIA. The strategy, for those unfamiliar, is simply to invest in the highest yielders of the DJIA called the Dogs of the Dow. AT&T is the currently the highest yielder in DJIA.
- Solid revenue growth & EPS growth: After minimal gains from 2009-2012 in revenue, and a dip in diluted EPS from 2010 to 2011, AT&T has turned the ship around and the current trend is pointing upward.
- DirecTV (DTV) acquisition – AT&T announced that it intends to acquire DTV, which could provide with considerable amount of revenue growth in the future.
- Possibility of REIT spinoff – The recent news of Windstream (WIN) spinning off a publicly traded REIT resulted in speculation that other telecom providers would follow suit. If AT&T follows in the footsteps of WIN, that would result in unlocking a lot of value for shareholders.
- In-Car 4G LTE – AT&T has been at the forefront in this field having secured deals with car manufacturers such as Audi, Tesla (TSLA), General Motors (GM) etc. AT&T could potentially add millions of new subscribers to their customer base as the current and future generation of cars come with a 4G LTE-capability.
The bottom line is that the companies that control the data pipes in an ever-connected and integrated digital world will command the marketplace. Telecom service providers (alongside cable service providers) will be able to throw their weight around and demand a piece of the pie from the hi tech media companies, as was evident from the recent announcement from Netflix (NFLX) – that Netflix has agreed to pay AT&T a fee to provide better streaming services to customers for an undisclosed amount. Read more about my thoughts here.
- The DirecTV merger comes with a lot of unknowns. AT&T is betting that they can grow their revenues and business with the acquisition of DirecTV. However, it remains to be seen how this will play out once approved.
- Capital expenditure is high and while T had indicated earlier this year on a free on capex, they have been forced to spend more in order to keep up and compete with others in the marketplace.
- Free cash flow has dropped this year.
A summary of the stock
- Symbol: T
- Quote: $34.62
- 52-week range: $31.74 – $37.48
- P/E: 10.17
- Forward P/E: 12.73
- Debt/Equity: 0.91
- Yield: 5.31%
- 5-yr average yield: 5.5%
- 5-yr DGR: 2.4%
- Book value: 17.75
- Graham number: 36.85
- Chowder rule: 8
Do you own T? What are your thoughts on the sector and the industry? Make sure to leave a comment below.
Full Disclosure: Long CVX, GE, JNJ, T. My full list of holdings is available here.
I sure did. When I first started, I was growth focused and was going after the hot emerging markets like China and India. Lucky for me, I didn’t dive straight into stocks and chose expensive mutual funds, which minimized my losses. Later, when I first started with stocks, I started with banks and financial institutions in 2008 – and we all know what happened to them. The first three stocks I picked don’t exist anymore (so, a great learning experience there). I wrote a post about it and you can read more details on My First Stock Investments.
2. What is the best advice you could give to someone unfamiliar with investing in stock markets?
Every investment should be well understood. If you do not understand how a company generates revenue and don’t understand its business model, then you shouldn’t be investing in it.
Having said that, I realize that new starters find it hard to find the info and dig into the details. The best option here is to read as much as you can. There are hundreds of blogs like this one that show how to evaluate companies and what to look for; if you still have questions – there are plenty of investors in online discussion forums willing to help each other – seek help and learn what works for you.
3. What kind of other blogs do you fellow on a regular basis (financial or otherwise) and why do you like it so much?
I follow a lot of investing and personal finance blogs that are available here. Some blogs follow a similar approach to mine and it validates my investment ideas – but I also like to follow some blogs that disagree with my investing style to keep myself in check.
Some of my other favorite blogs include Brain Pickings, Seth Godin and a few other entrepreneurial blogs.
4. Do you have any foreign investments and why?
Currently, most of my holdings are companies based in Canada and USA. So, technically the US-based stocks are foreign holdings (I live in Canada). The exposure I get from Canadian-based companies is very limited. When investing in financials, commodities and service sectors, Canada has some great stocks to offer, but options are limited for other sectors and I get exposure to great companies by owning US-based stocks. Some of the stocks I own have a global footprint and provide great diversification. I would also like to own stocks that aren’t based in US or Canada to achieve better diversification – and that is in the plans for the future. Why diversify? I wrote about the importance of diversification a few weeks ago…read details about it here.
5. What is the first investment/financial book that pops into your mind when I say, “What’s your favorite book?” and why?
I have read a few books and of course there’s the Intelligent Investor from Benjamin Graham that everyone loves. While I haven’t completely read the book cover-to-cover, I learned a lot from it and find myself going back to it over and over. But everyone says that, so lets drop that book for now.
I have two other books that pop into my mind simultaneously. First is The Wealthy Barber from David Chilton, who is a popular figure in Canada. He has a very easy style of writing and it was one of the first books I read, thanks to my first boss/mentor.
But I am reading another book currently that I picked up recently and it is hugely entertaining and filled with some fantastic ideas. I wont spoil it and give away as I want to write a full book review about it on this blog. So, stay tuned 😉
For my nominations, I’d like to nominate the following blogs.