Whether it’s growth or value, one of the best things for investors to do is look for solid growth potential combined with fair valuations. Sprinkle in dividends and you have a recipe for total return success. We always like to remind our readers about the impact total return has on portfolios because it is one of the best ways to help improve the chances for overall investing success.
Again total return is the combined increase in a stock’s value plus dividends. For instance, if you buy a stock at $20 that pays a 3% dividend, and it goes up to $22 in a year, your total return is 13%, or 10% for the increase in stock price and 3% for the dividends paid.
A recent report from Jefferies has an outstanding selection of growth and value picks for investors to consider. We picked the top stock picks that not only have strong upside potential, but they are reasonably priced and all pay dividends. All are rated Buy at Jefferies.
This stock has had an incredible run this year but is off over 10% in less than a month. AT&T Inc. (NYSE: T) is the world’s largest provider of pay TV, with TV customers in the United States and 11 Latin American countries. In the United States, the AT&T wireless network has the nation’s self-described strongest 4G LTE signal and most reliable 4G LTE. The company also helps businesses worldwide serve their customers better with mobility and highly secure cloud solutions.
With its shares trading at a very cheap 14.3 times estimated 2016 earnings, the company continues to expand its user base, and strong product introductions from smartphone vendors have not only driven traffic but increased device financing plans.
The Jefferies report noted:
In the near-term AT&T has several major catalysts that will likely drive strong network traffic demand: DirecTV Now and Mobile, “Data-Free TV” for DirecTV/U-Verse subscribers, and increasing penetration of unlimited data plans. We believe that the company is well-positioned to address on-going traffic requirements, with additional LTE capacity available and the ability to leverage small cell deployments
Other top Wall Street analysts have cited the company’s positive commentary on free cash flow, as well as improving video/broadband trends later this year with single truck-roll and new converged offerings expected to be coming in October. The recent FCC initiative to open up the set-top business may be part of the reason the stocks has been hit hard recently.
AT&T investors receive a 4.8% dividend. The Jefferies price target for the stock is $48, and the Wall Street consensus price objective is $42.83. Shares closed Tuesday at $39.96.