Daily Stock Pick for July 20, 2023

Today’s pick is an intriguing one.

It’s a giant multinational company that’s been around forever – yet is paying a nearly 8% dividend yield (that is easily covered by its operating cash flow).

However, this dividend yield has been somewhat “inflated” by a falling stock price – one that has just hit multi-decade lows.

Yet, recent stock price movements indicate that it’s bouncing back from these lows…

Meaning if you get in now, you could not only capture an attractive dividend – but potentially enjoy significant capital gains as it bounces back as well.

Obviously there’s risk involved. But the upside could be a sweet “double whammy” of both high dividends and substantial capital appreciation.

AT&T Inc. (T)

A name that needs no introduction, this telecommunications giant saw its stock price hit a 30-year low on Tuesday.

The reason for this – other than its “old” problems stemming from its blundered acquisition of Time Warner and encroaching competition from smaller upstarts – has to do with lead on its cables.

A series of articles by the Wall Street Journal has implied that the firm failed to protect employees working with these cables (last deployed in the 60s).

But the company has just cleared the air, clarifying that such cables are under 10% of its network and that it followed proper procedures with regards to the employee handling of these cables. As such, the chances for drastically high legal liability costs seem unlikely.

The good news is that the “lead cable selloff” has also presented us a chance to pick up AT&T stock at historic lows. The stock is already bouncing back Wednesday – indicating that Wall Street believes the stock has been oversold.

Combine this with its nearly 8% dividend yield (which again, is handily covered by its cash flows) plus the fact that it might surprise the markets when reporting Q2 earnings next week (as consensus estimates have been highly conservative)

And you have a recipe for a stock that could deliver on both the income and capital gains front.

To your wealth,
Felix @ Ace of Investing