Published Mon, 29 Jun 2020 05:35:18 -0400 on Seeking Alpha
Seeking AlphaDividend Ideas | Tech AT&T Offers A 7% Yield And Double-Digit Total Return OpportunityJun. 29, 2020 5:35 AM ET|| About: AT&T Inc. (T)by: Nicholas WardNicholas Ward The Dividend KingsDividend ideas from a top team of analysts to help you sleep well at night.SummaryAT&T shares are trading at their lowest valuation in several decades.
Mean reversion could result in significant upside from here.
And, the company's 7%+ yield means that patient investors will be paid generously while they wait for a turnaround.
Earlier I published an article highlighting why I believed that high yielding AbbVie (ABBV) has the potential to generate a double-digit CAGR for investors in the coming years due to the combination of its very low valuation and very high dividend yield.
When I look back at my success as an investor, it's clear that the value investing approach which relies on targeting irrationally cheap stocks and then relying on mean reversion to eventually generate gains has been paramount. When I combine with value-oriented approach with safe and reliable dividend yields, I'm able to produce even larger returns. And finally, due to my focus on reliably increasing passive income, the party isn't over, per say, when the mean reversion occurs, because even when my holdings reach full (or even over-valued) I'm content to hold onto my unrealized gains and simply allow the growing dividends to compound over the long-term.
What's more, when buying dividend growth stocks at irrational discounts, I'm not only setting myself up for large capital gains via mean reversion and multiple expansion, but I am also increasing the size of my passive income stream because when stocks are cheap they have "accidentally" high dividend yields (to steal a phrase from Jim Cramer) and I can buy more shares for the same amount of invested capital than I would have been able to if they were trading for higher prices that coincided with my fair value estimates.
And... Read more