It is now the final week of the year. Happy New Years. Time to pick another stock to invest in. This will be the 2nd stock we purchase. With the power of math, we calculate that this will now double the number of stocks we own, from 1 to 2. While this does not make us a Wall Street power house yet, a second step is needed to get there.
We have decided to add AT&T (T) to our list of stocks. This week, we bought 7 shares at $250.03 including our trading commission. Currently, AT&T (T) is paying $1.92 a share per year, giving us a yield of 5.4% of our purchase price. In the world of stocks, this is a fairly high yield. AT&T (T) is going to pay us $13.44 a year for owning the shares. A nice little addition to our dividend payments.
In December, AT&T (T) just increased its dividend a little over 2%. While not the largest of increases, AT&T (T) has been increasing its dividend for 31 years. 31 years of not only increasing its dividend every year, but 31 years of never missing a payment. If I was to lend my money to someone who has paid their bills for 31 years, I would feel confident that they will continue to pay me. While this could always change in the future, it takes a long time to earn this title of Dividend Champions. A Dividend Champion is a company that raises it dividend every year for 25 years. Being that it takes so long to earn this title, a company should not be willing to give up this title.
AT&T (T) also just purchased DirecTV. This merger should give AT&T (T) growth in the future to keep increasing its dividend. Another growth opportunity is with cell phones and wireless data plans. We believe that this growing trend will continue in the future. I know I use up most of my data plan every month and I do not watch many videos on my phone. If I had a larger data plan, I know I would use my phone even more. The next level of 5G cell phone service is being worked on, which will be significantly faster than the current 4G. Which means more people will be upgrading their phones and buying larger data plans again. With my TV plan, I switch to AT&T (T) U-verse years ago from their competitor, and I am very happy with the switch. For me, their customer service was much better.
With the high dividend yield, a long history of increasing its dividend, and the opportunity to grow its future earnings, this will be a great stock to own for a long time. When looking at stocks, these are great attributes to look at. However, there are many more details we could look at, such as debt level, PE ratio, revenue growth, etc. We are still early in our journey. This is a great reason why we are keeping our purchases small. This will allow us to learn more about investing and learning to make good choices while dipping our toes in the water. While we agree that $250 could be used to buy a lot of stuff, this is what we are doing to build our future.