Recent Buy – October (Part 1)

On 25th October, I bought 60 stocks of the AT&T (T) at an average price of $35.25.

Total money invested is $2,115.0. Dividend yield on this purchase yields 5.56%.

This purchase will yield about $117.60 in annual dividends ($0.49 paid quarterly, typically in January April July and October), which will be reinvested back into the stocks automatically without any brokerage charges. What I like the most about T is its wide moat as well as presence outside US specially in Mexico.

Next dividend increase should be coming in any day now, I expect a penny increase to the quarterly dividend but with huge debt and upcoming close of the Time Warner deal it is going to be tough but will see. I expect the debt after closing the TWX deal will be in the neighborhood of $235 billions. With the FCF of about $40+ billions every year ($35+ B from AT&T and about $5 B from TWX), I believe AT&T will be good even in this rising interest market if they can bear themselves from not engage in any M&A or any other investing activities for next 3 to 5 years. I also believe that company will announce cost cutting if acquiring TWX gets approved.

Typically, I do not like to automatically reinvest dividends back in the very same stocks, just purely because the timing of the dividend payments hit my account may not necessarily be the best time to invest the sum of dividend in the very same company. There might be some more companies that may gain my interest little more. However, recent drop makes me feel comfortable reinvesting dividends for this stock, atleast for now.

What are your thoughts on this purchase ? What are the stocks you are buying or looking to add ?

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