When pundits in the financial media warn that interest rates are going higher and to look out, longtime investors laugh and think back to the days before the financial crisis in 2007, when the 10-year Treasury bond had a yield over 5%. That bond now yields a paltry 0.90% and, after taxes and inflation, actually has a negative real-return yield.
So what are income-starved investors to do? One of the best ideas is to look for stocks that pay dependable dividends and have for years. We screened the BofA Securities research universe looking for companies that pay big dividends that look like they will remain safe. We found five that are rated Buy that make sense for investors looking to increase their income streams.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
This is a top telecom and entertainment play. AT&T Inc. (NYSE: T) is the largest U.S. telecom company and provides wireless and wireline service to retail, enterprise and wholesale customers. The company’s wireless network serves approximately 124 million mobile connections, with 77 million postpaid subscribers.
While AT&T’s traditional wireline voice business has undergone a period of secular decline due to wireless substitution and cable competition, the company through WarnerMedia has become a diversified media and entertainment business.
The third-quarter results showed solid subscriber growth in the company’s market focus areas of wireless and fiber broadband, while continuing to reflect strong cash flows, financial strength and business resiliency. AT&T also updated guidance and now expects 2020 free cash flow of $26 billion or higher, with a dividend payout ratio with a percentage in the high 50s.
AT&T also is currently accepting bids for the firm’s DirecTV stake, and while it will be a big loss, it will help the firm continue to cut expenses and get an albatross off the books.
Investors receive a 6.78% dividend. BofA Securities has a $36 price target for the shares, while the Wall Street consensus target is $31.36. AT&T stock closed trading on Thursday at $30.69.