Telecom giant AT&T (NYSE: T) has been around for generations in various forms, and it’s not done growing. Its shares have been beaten down because of competitive pressures and uncertainty surrounding its planned merger with Time Warner. Of course, as a stock’s price falls, its dividend yield rises, and AT&T’s payout recently yielded a fat 6.2 percent.
Better still, that payout is likely to increase in the future, as AT&T has boosted its dividend for 34 years in a row. AT&T generated roughly $18.3 billion in free cash flow over the trailing-12-month period. Its robust cash flow generation is likely to continue, thanks to its being an Internet of Things (IoT) platform provider and its strong positions in the still-reliable wireless service and video businesses. (The company will soon be rolling out its 5G network.)
With the merger with Time Warner recently completed, AT&T’s long-term prospects are even better. The union will create one of the world’s leading entertainment producers, open up new service bundling opportunities and allow for the combined company to use AT&T’s strength in the mobile and internet spaces to get better advertising rates for Time Warner networks and content.
AT&T is the second-largest wireless carrier in the U.S. and the nation’s top wireline and pay-TV service provider. Those businesses give it a wide defensive moat against its potential challengers. Give the company some consideration for your long-term portfolio.
Ask the Fool
Q: What’s “market share”? – M.R., Venice, Florida
A: It refers to the percentage of a market that a product, service or company commands, and it’s a useful measure to track when researching companies or industries.
Think about smartphones, for example. If many of your friends use iPhones, you might assume that Apple enjoys the highest market share in the category. But actually, as of the end of March, Samsung had that honor, with a 20.5 percent global share; followed by Apple, with 14.1 percent; and the Chinese company Huawei, with 10.4 percent. (That means that 20.5 percent of smartphones sold worldwide in the last quarter were Samsung devices.)
It’s also good to pay attention to trends and growth rates. Apple may be in second place, but it gained share from the end of 2017 to the end of March 2018, rising to that 14.1 percent from 13.7 percent. Samsung’s share shrank from 20.8 percent to 20.5 percent.
As another example, the U.S. market share leader in ice cream brands last year was private label brands, with 20 percent of the market, followed by Breyers, with 9.2 percent; Ben & Jerry’s, with 8.7 percent; and Haagen-Dazs, with 8.4 percent.
Q: Why can’t I find stock listings in the newspaper on Mondays? – C.C., Seattle
A: The stock markets in America are closed on weekends, so there is no action to report on Mondays.
Don’t think you have to follow stocks’ daily moves, though. It’s more important to keep up with how a company is performing than how its stock is moving. Great fortunes can be amassed by buying into companies you’ve researched well and believe in and then simply hanging on for the long term.
My dumbest investment
My dumbest investment was when I trusted a “day trader” to execute an order to buy $10,000 worth of Apple at $27 per share. Instead, he bought shares of another company, which immediately went bye-bye. The guy’s boss? He stood behind this bozo.
The lesson I learned is: Don’t trust anyone working with your money. If you don’t take care of your own business, then someone else will. – I., online
The Fool responds: If it was really a day trader who was managing your money, you probably would have done poorly, regardless. Day traders are known for buying and selling frequently, which racks up commission charges and has any gains taxed at generally higher tax rates.
More importantly, day traders are known for losing money. No less an authority than the Securities and Exchange Commission has warned: “Day traders typically suffer severe financial losses in their first months of trading, and many never graduate to profit-making status.” If you’d owned Apple stock for only a few hours or days, you would have lost out on a heck of a lot of future growth.
Consulting financial professionals is fine, but as you concluded, it’s best to stay in control of your own money and do your own research and thinking, too, as no one has your best interests at heart as much as you do.
Local journalism is essential.
Give directly to The Spokesman-Review's Northwest Passages community forums series -- which helps to offset the costs of several reporter and editor positions at the newspaper -- by using the easy options below. Gifts processed in this system are not tax deductible, but are predominately used to help meet the local financial requirements needed to receive national matching-grant funds.
Subscribe to the Coronavirus newsletter
Get the day’s latest Coronavirus news delivered to your inbox by subscribing to our newsletter.