Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Dividend Aristocrats Part 51: AT&T Inc. (T)

Page 1 of 3

AT&T Inc. (NYSE:T) is the largest telecommunications company in North America based on its $281 billion market cap.

AT&T Size

The company’s high dividend yield and long history of dividend increases make the company a favorite holding for many dividend investors:

– AT&T has a dividend yield of 5.4%.

– AT&T has increased its dividend payments for 32 consecutive years

AT&T Dividend History

A&T’s stock price is more stable than average. The company’s 10 year stock price standard deviation and beta are below:

– Stock price standard deviation of 22.3%

– Beta of 0.78

The company offers investors high yields along with lower-than-average stock price risk.

AT&T has outperformed the market over the last decade. $1 invested in AT&T 10 years ago would be worth $2.31 today versus $1.80 for the same investment in the S&P 500 (SPY).

AT&T Total Returns

For a company to have paid increasing dividends for 32 consecutive years, outperform the market over the last 10 years, and be the largest player in its industry, AT&T must have a strong competitive advantage.

AT&T Logo

Among the investors tracked by Insider Monkey, AT&T is fairly popular, with 60 funds reporting long positions as of the end of September 2015, amassing 1.90% of the company’s stock. However, during the third quarter of the last year, the number of funds with long positions jumped by 11. Warren Buffett’s Berkshire Hathaway initiated a stake in AT&T and disclosed 59.32 million shares in its last 13F filing.

AT&T’s Competitive Advantage

The United States wireless telecommunications market is dominated by 4 companies:

– AT&T Inc. (NYSE:T)

– Sprint Corp (NYSE:S)

– Verizon Communications Inc. (NYSE:VZ)

– T-Mobile US Inc (NASDAQ:TMUS)

Together, these 4 companies have greater than 90% market share. AT&T and Verizon each have over 30% market share.

Competition is reduced when an industry is dominated by only a few large businesses. Lower competition is not good for consumers, but great for the few dominant businesses.

AT&T and Verizon in particular are large enough to reap outsized profits in the wireless industry.

There’s several reasons why the wireless industry is subject to domination by a few large corporations.

1. Up-front costs of building infrastructure

2. Obscene wireless spectrum usage costs

3. Brand recognition and scale advantages

Wireless spectrum usage is controlled and auctioned by the United States government. AT&T spent $18.2 billion in the last spectrum auction. In total, the auction raised $44.9 billion for the FCC. The next auction will begin in March of 2016.

Spectrum auctions prevent smaller players from gaining access to the wireless industry.

Follow At&t Inc. (NYSE:T)
Trade (NYSE:T) Now!
Page 1 of 3
Loading Comments...
X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!