A Fat Blue-Chip Dividend

Telecom giant AT&T (NYSE: T) has been around for generations in various forms, and it’s not done growing. Its shares have been beaten down due to competitive pressures and uncertainty surrounding its planned merger with Time Warner. Of course, as a stock’s price falls, its dividend yield rises, and AT&T’s payout recently yielded a fat 6.2 percent. Better still, that payout is likely to increase in the future, as AT&T has boosted its dividend for 34 years in a row. AT&T generated roughly $18.3 billion in free cash flow over the trailing-12-month period. Its robust cash flow generation is likely to continue, thanks to its being an Internet of Things (IoT) platform provider and its strong positions in the still-reliable wireless service and video businesses. (The company will soon be rolling out its 5G network.) With the merger with Time Warner recently completed, AT&T’s longterm prospects are even better. The union will create one of the world’s leading entertainment producers, open up new service bundling opportunities and allow for the combined company to use AT&T’s strength in the mobile and internet spaces to get better advertising rates for Time Warner networks and content. AT&T is the second-largest wireless carrier in the U.S., and the nation’s top wireline and pay-TV service provider. Those businesses give it a wide defensive moat against its potential challengers. Give the company some consideration for your long-term portfolio.