Boston, MA 01/09/2013 (wallstreetpr) – Of late, AT&T Inc. (NYSE:T) is in the middle of many things. The telecoms operator is reported to be expanding and upgrading its network in an ambitious project to compete effectively in the industry. The company is also selling assets as part of its consolidation efforts, to avoid unnecessary burden while raising funds for future investments.
As far as future investments are concerned, the company is looking at the opportunity in connected vehicle segment, where it is already in talks with Tesla Motors Inc (NASDAQ:TSLA) and Audi. Moreover, the company is said to be considering merger with the leading U.K. carrier Vodafone Group (VOD) in an effort to capture the lucrative Europe telecom industry.
If these investments are successful, there will be reasons for investors to celebrate. However, at present the stock lacks reliable growth opportunities. This explains why the stock’s performance in the year so far, and even in the last year has not been anything to be proud about.
This brings us to the question of the hefty dividend yield of 5 plus percent which the company announced. With this kind of dividend, AT&T Inc. (NYSE:T) is easily one of the highest dividend yielder in the S&P 500 Index. Obviously high dividends come as good news to short-term investors. However, for the long-term, the stock scares.
A good company is the one which offers modest dividend and couples that with stable growth in stock price. As we can see, AT&T Inc. (NYSE:T) has scored well in the former – issuing modest dividend. However, the company lacks the strength to grow its stock price and this doesn’t make it a healthy stock, especially for the long-hold.
Already, shares of AT&T Inc. (NYSE:T) are looking bad compared to competitors and next to the broader market. But there is reason why the stock is declining in value. The company has failed to add many new customers as was done by its main rival Verizon Communication (NYSE:VZ) last year. Furthermore, AT&T Inc. (NYSE:T)’s landline network is in a steady decline which is hurting the growth of the stock.
Bottom line
AT&T Inc. (NYSE:T) has a lot of money to give to shareholders in the form of dividend, and perhaps even by way of shares buyback. Most of this money comes from its ongoing asset sales, and this being the case, the stock is good for investors looking for income, but value investors may not have enough in the short-term.
