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AT&T (T) Dividend Stock Analysis

 March 30, 2012 10:27 AM

AT&T Inc. (T), together with its subsidiaries, provides telecommunications services to consumers, businesses, and other providers worldwide. This dividend aristocrat has paid uninterrupted dividends on its common stock since 1984 and increased payments to common shareholders every for 28 consecutive years. The company's previous name was SBC Communications, but after acquiring legacy AT&T in 2006, assumed the name of the legacy telecom giant.

The company's last dividend increase was in December 2011 when the Board of Directors approved a 2.30% increase to 44 cents/share. AT&T ‘s largest competitors include Verizon (VZ), Sprint-Nextel (S) and Deutsche Telecom (DTEGY).

[Related -AT&T Inc. (T) Q4 Earnings Preview: Direction of Surprise Dictates January EPS Price Response]

Over the past decade this dividend growth stock has delivered an annualized total return of 2.50% to its shareholders.

The company has managed to deliver zero growth in EPS since 2002. Analysts expect AT&T to earn $2.36 per share in 2012 and $2.54 per share in 2013. In comparison AT&T earned $2.20 /share in 2011, before several onetime charges (discussed below).

[Related -T-Mobile US Inc (NYSE:TMUS): AT&T Inc.(NYSE:T) Could Suffer In Wireless War]

In the prior year, AT&T looked cheaper than usual due to one-time accounting items. This year, the company looks more expensive than it should be, again due to onetime events. From the company's Q4 press release:

Fourth-quarter 2011 net income attributable to AT&T totaled $(6.7) billion, or $(1.12) per diluted share. Excluding significant non-cash charges of $0.65 from the actuarial loss on benefit plans and $0.48 for directory asset impairments, along with a one-time charge of $0.44 for termination of the T-Mobile USA acquisition and a one-time gain of $0.03 from a tax settlement, adjusted earnings per share was $0.42.

My outlook on the US telecom industry is neutral at the very best. The telecom industry does not operate in the utility like monopoly environment that the "old" AT&T used to operate prior to its break-up in 1984.

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