The higher the market goes, the more dangerous things are getting, and now may be a great time for stock investors to start rotating out of momentum into solid growth stocks. One good area to rotate to may be the telecom and cloud stocks. In a new report, Oppenheimer has five to buy for the rest of 2015 that make good sense.
Oppenheimer previewed stocks that will be reporting starting this week and has five quality companies investors can feel good about buying now. With the market trading at over 18 times trailing earnings, now may be a very good time to take winners and rotate the capital to growth stories with less volatility.
The nation’s largest carrier is also a free cash flow champ. AT&T Inc. (NYSE: T) has dominated the telecom scene for years, and while some analysts are lowering the company’s postpaid adds for the second quarter, many across Wall Street are becoming increasingly bullish on the Mexico business and the completion of the DirecTV deal, both of which look to add solid future revenues.
The Oppenheimer team points out in the report that AT&T provides the highest dividend yield among the mega-caps at 5.37%. With the close of DirecTV acquisition, the dividend payout will improve to 70% (from 96% as a standalone figure last year), providing a much more comfortable level for sustainable dividend growth going forward as the company will have a much safer margin for coverage.
With content spanning not only the DirecTV offerings, but also the U-verse packages that AT&T provides, investors nervous over a very shaky market can feel good about adding the stock to portfolios now.
AT&T investors are paid an outstanding 5.37% dividend. The Oppenheimer price target for the stock is $42. The Thomson/First Call consensus price target is $36.54. The shares closed trading on Friday at 35.01.