How AT&T Became the Dow's Top Dividend

AT&T's dividend yield tops the Dow and that position won't change any time soon.

May 31, 2014 at 1:00PM

Investors looking for safe, long-term investments often start their search on the Dow Jones Industrial Average (DJINDICES:^DJI), a group of 30 of the best-known companies in the world. These businesses are behemoths in a diverse set of industries that have generated profits and cash flow for years.

When companies get that big, one of the ways they reward investors is paying them a dividend, and buying long-lasting dividend stocks is one of the best ways to beat the market. Right now, AT&T (NYSE:T) is the Dow's highest yielding dividend at 5.2%, and that high yield have been building over the past decade.

How to build a high dividend stock
AT&T's high dividend yield has been built over the past decade as the company has steadily increased its payout. Year after year, AT&T's dividend has increased, and since 2008 the stock is actually down slightly. The result is the high dividend yield we see today.

T Dividend Chart

T Dividend data by YCharts

Sometimes when yields rise that high, it's a sign that the business is headed for trouble and management is paying shareholders as much as they can while cash is still flowing. But for AT&T, the wireless business couldn't be stronger and it's in a perfect strategic position to grow in the market.

AT&T currently has something of a duopoly with Verizon Wireless at the top of the wireless landscape, a business that's still growing. That position is critical, because the billions of dollars spent to acquire spectrum and build its network can't easily be replicated by competitors, forcing them to compete solely on price.

In the meantime, AT&T's business continues to spit out billions of dollars of cash every year, some of which is also returned to investors in the form of a dividend.

Foolish bottom line
AT&T has everything investors should like in a dividend stock. Its core business has a solid competitive moat, margins and cash flow are consistent year after year, and the stagnant stock price has led to a strong yield for investors buying today.

This is the highest yielding stock on the Dow, and investors looking to beat the market should take a second look at how attractive AT&T is as an investment right now.

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend-paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Travis Hoium manages an account that owns shares of AT&T. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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