While the Santa Claus rally has been a nice end of the year gift, albeit with some selling yesterday, it has added to the already healthy gains for 2020. All three major indexes have hit all-time highs, as has the Russell 2000, so investors should consider making some changes now. While Wall Street is generally positive on the prospects for next year, and Goldman Sachs just raised the firm’s gross domestic product target for the first quarter to 5%, it is very possible a sizable correction could be on the way.
For many, raising some cash now and selling into strength makes a lot of sense. For those wanting to stay close to fully invested, it makes sense now to shift to some contrarian stocks that could end up being solid 2021 ideas. We screened the BofA Securities research universe looking for companies that have been out of favor or those in sectors that are, and we found five that pay solid and dependable dividends.
While all are indeed rated Buy at BofA Securities, 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.
Investors receive a 7.29% dividend. BofA Securities has a $36 price target for the shares, and the Wall Street consensus target is $31.14. AT&T stock closed trading on Tuesday at $28.54.