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For income-focused investors, AT&T Inc. (NYSE: T ) has long been a staple in dividend portfolios. With a forward dividend yield of 6.48% and a payout ratio of just 47.03%, the telecom giant appears to offer an attractive combination of high yield and sustainability. However, before rushing to buy shares from AT&T, it is worth considering alternative options that can potentially provide even better short-term income play.
Indeed, AT&T has a history of consistent dividend growth, having raised its payout for 38 consecutive years until 2022 when it cut its monthly dividend from $0.52 to $0.2775 per share following the spin-off of its media assets. But things are looking up for the company, with improved performance suggesting that dividend increases may resume in the near future.
AT&T’s Q1 2024 earnings release highlighted solid 5G and fiber customer additions, profitable growth driven by increased Mobility services and broadband revenues, and significant year-over-year free cash flow improvements. The company also reaffirmed its full-year financial guidance, projecting 3% wireless services revenue growth, 7%+ broadband revenue growth, and free cash flow in the $17-$18 billion range.
Analysts seem to agree that AT&T is on the right track. The last three analyst ratings, released by Barclays, Scotiabank, and RBC Capital between April 11 and April 29, 2024, have an average price target of $19.83, which represents a 15.51% upside from current levels.
So, with a juicy 6.5% yield, improving fundamentals, and bullish analyst sentiment, AT&T looks like a tempting buy for dividend investors. However, there is one key factor to consider before pulling the trigger: the looming specter of a possible US recession.
Many economists and market watchers believe the U.S. economy is on the verge of a recession, which could hurt stock prices across the board — even for relatively defensive names like AT&T. If a recession occurs, there may be a better opportunity to acquire AT&T stock at a better value.
High-Yield Alternative Opportunities
In the meantime, income investors may want to consider alternative options: Alpine Basecamp Notes. This short-term cash management tool, offered by the real estate investment platform EquityMultiple, targets an attractive 9% return with a short 3-month term and a minimum investment of $1,000.
The beauty of Basecamp Alpine Notes is that it allows investors to earn high returns on cash while maintaining the flexibility to deploy that capital when better opportunities arise — such as a potential recession driven AT&T stock price. Instead of locking up their funds in AT&T stock today, investors can put their money in Basecamp Alpine Notes, earn a 9% annual return, and then have dry powder ready to fire when the time is right.
Basecamp Alpine Notes also offers a level of simplicity and predictability that can be appealing in uncertain economic times. With zero fees and monthly compounding, investors know exactly what to expect in 3 months. And with a strong track record of meeting all payment obligations, EquityMultiple has built a reputation as a reliable partner for income-seeking investors. Visit the EquityMultiple website to learn more about Basecamp Alpine Notes.
Of course, no investment is without risk, and Basecamp Alpine Notes is no exception. As with any investment, it’s important to do your due diligence and carefully consider how the note fits into your overall financial plan.
But for investors looking to reap AT&T’s 6.5% dividend and wondering if now is the right time to buy, Basecamp Alpine Notes offer an attractive alternative – a way to generate high short-term income while keeping options open for future opportunities. In a market full of uncertainty, that kind of flexibility can be priceless.
This article Thinking of Buying AT&T For Its 6.5% Dividend Yield? Try This Alternative Option originally appeared on Benzinga.com
