Investors looking for blue-chip dividend stocks should consider the Dividend Aristocrats, which have increased their shareholder payouts for at least 25 years in a row. These stocks have stood the test of time, thanks to strong competitive advantages and top brands.
AT&T Inc. (T) is a Dividend Aristocrat, and has increased its dividend for over 30 consecutive years. It is a tried-and-true dividend growth stock, with steady dividend increases each year. Not only that, but it is also a high-yield stock with a dividend yield of 6.2%. This is a highly attractive yield for income investors, such as retirees.
A Looming Media Giant
AT&T attained its Dividend Aristocrat status by growing into one of the largest telecoms in the world. It has a market capitalization of $234 billion. Its products and services include wireless and cable television. It also owns satellite TV provider DirecTV.
On July 24th, AT&T reported second-quarter financial results. Revenue of $38.99 billion fell by 2.1% from the same quarter a year ago, but adjusted earnings-per-share increased by 15% and operating cash flow increased 18% for the quarter.
Source: Earnings Presentation, page 5
AT&T had 3.8 million total wireless net adds last quarter. Its U.S. wireless segment reported service revenue growth, with nearly 400,000 braded smartphone additions, along with fairly low second-quarter postpaid phone churn of 0.82%. In entertainment, AT&T added 342,000 DIRECTV NOW subscribers.
AT&T might have even stronger growth ahead of it, now that it has completed its $81 billion acquisition of media giant Time Warner Inc (TWX). There was a great deal of uncertainty surrounding the outcome of the acquisition, which had been contested by the U.S. Department of Justice on antitrust grounds. Now that the deal is completed, AT&T is about to become a giant in a new area—content.
AT&T and Time Warner put together will have 170 million direct-to-customer relationships. Time Warner has a number of huge media properties, including TBS, TNT, HBO, Cinemax, and the Warner Bros. movie studio. The benefits are already starting to materialize—HBO and Turner both grew subscription revenue last quarter, while advertising revenue at Turner rose 3%.
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