AT&T: Dividend Aristocrat (still) at a discount

You can’t beat a Dividend Aristocrat at a discount. You just can’t.

Everything is better when it’s on sale. The beer tastes better when it’s half price at happy hour, the clothes look a little bit better when dangling on the clearance rack and every vacation seems more relaxing when you use bonus miles and reward points to fund most of the cost.

And dividend stocks are no exception.

I’ve been waiting for a dividend-less day to make a purchase or two and, well, turns out that day was today.

Today’s Purchase: AT&T

I’ve had my eye on AT&T for some time. As a staple in my portfolio, one of my foundation stocks, I couldn’t help but notice its slow and steady decline. It’s more than 15% off its 52-week high of $43.03, which is pretty close to what I paid for my first share last December ($42.59).

Since then, I’ve been slowly adding to my position when opportunities to lower my cost-basis pop up. I bought a pair of shares for $38.05 back in May, which helped. I bought another for $36.41 in July, a handful more in August for $37.68 apiece and, most recently, today’s six shares at an average price of $36.58.

Before today, I had nine shares of AT&T at an average cost of $39.10. My position was worth 329.08 and made up 2.36% of my Dividend Farm. Thanks to the purchase, I have 15 shares at an average cost of $38.09. The shares are worth $548.78 at current prices and make up 3.88% of my portfolio.

With an annualized dividend of $1.96 a share, today’s purchase boosted by forward annual income by $11.76.

AT&T: By the Numbers

AT&T has been raising its dividend for each of the last 32 years. Put in another way, the company has been boosting its dividend pretty much my entire life (I’m 33). Now that I’m a dividend-growth investor with a pretty sizable chunk of my overall portfolio invested in AT&T, the hope is it will actually pay an ever-increasing dividend for the rest of my life. That sure would be nice.

AT&T has a really, really, really nice dividend yield of 5.41%. The payout ratio is higher than I’d like, currently sitting at 92.45%, but you can’t have it all, right? It’s been growing its dividend at just 2% over the last three years, but I consider the buy more of an income play for right now. With the yield as high as it is, I don’t need much growth to make me happy. As long as AT&T keeps paying the dividend it’s paying, it’s serving its purpose.

This was the first purchase I’ve made since buying 16 shares of NRZ last week.

March on!

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