Today I picked up some additional shares of AT&T which has been trading about 10% below my cost basis. There remains some uncertainly about the future prospects of the company in regards to its Time Warner acquisition that is pending approval from the courts. In addition, it recently came to light that the company has had a business relationship with one of President Trump's former lawyers which some on Wall Street may find concerning. Below are details of the purchase:
Purchased: 24 shares x $31.38 = $753.12 (+$4.95 commission)
Dividend Income: $48.00 ($0.50/sh paid quarterly in Feb, May, Aug, and Nov.)
P/E ratio: 6.7 TTM and 9.1 Forward P/E (vs. S&P @ 24.5)
Debt to capital < 50%: Yes, ~47%
Interest coverage ratio of at least 3:1: Yes, 3.4x
S&P and/or Moody's credit rating of BBB+/Baa1 or better: Yes, BBB+
Current dividend yield > 1.5x S&P yield: Yes, 6.2% vs. S&P @ 1.8%
Payout ratio < 60% (or <85% for utilities): Yes, 41% (see comments below)
Dividend King or CCC classification: Champion (33+ years of annual dividend increases)
Comments: If the payout ratio of 47% appears to be relatively low in light of AT&T historical payout ratio, you are right, it is and that is because of the favorable earnings impact the company recognized as a result of the recent tax legislation that passed last year. CFRA's latest 2018 earnings estimate for T is $3.42 and if this proves to be accurate, the forward looking payout ratio would be 58.5%. The latest earnings release for 2018 Q1 that was released a couple of weeks ago can be found here. If the price continues to hang out at this level or below, with all else remaining constant, I may make another purchase or two in the near term.
Purchased: 24 shares x $31.38 = $753.12 (+$4.95 commission)
Dividend Income: $48.00 ($0.50/sh paid quarterly in Feb, May, Aug, and Nov.)
P/E ratio: 6.7 TTM and 9.1 Forward P/E (vs. S&P @ 24.5)
Debt to capital < 50%: Yes, ~47%
Interest coverage ratio of at least 3:1: Yes, 3.4x
S&P and/or Moody's credit rating of BBB+/Baa1 or better: Yes, BBB+
Current dividend yield > 1.5x S&P yield: Yes, 6.2% vs. S&P @ 1.8%
Payout ratio < 60% (or <85% for utilities): Yes, 41% (see comments below)
Dividend King or CCC classification: Champion (33+ years of annual dividend increases)
Comments: If the payout ratio of 47% appears to be relatively low in light of AT&T historical payout ratio, you are right, it is and that is because of the favorable earnings impact the company recognized as a result of the recent tax legislation that passed last year. CFRA's latest 2018 earnings estimate for T is $3.42 and if this proves to be accurate, the forward looking payout ratio would be 58.5%. The latest earnings release for 2018 Q1 that was released a couple of weeks ago can be found here. If the price continues to hang out at this level or below, with all else remaining constant, I may make another purchase or two in the near term.
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