Shareholders of telecom giant AT&T (NYSE:T) have seen the capital appreciation of portion of their total returns muted in the past couple of years. After rising steadily from the mid-$20s to the mid-$30s three years ago, shares have traded largely sideways since that time. However, T has proven to be a reliable dividend stock with a massive, steady yield and that has kept investors interested. Some pessimism has driven the stock down recently to its 200 DMA so on that note, I thought now would be a good time to take a look at T to see if it is more than just a bond replacement.
Overall, I like T here as a defensive play. The market is making new highs and although I'm not calling a top, I am cautious here. The market in general looks expensive and T is defensive, cheap and provides a great yield, a terrific combination in today's environment for defensive investors. I think T is probably worth something like $40 but until we see sentiment improve, it won't get there. But don't worry; that 5.4% yield is safe and rolls in each quarter without exception, a pretty nice consolation prize if you ask me.
Source: Seeking Alpha
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