Retirement Strategy: Not One But Two Gifts For Dividend Investors

Retirement Strategy: Not One But Two Gifts For Dividend Investors

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I simply cannot let this moment in time go unnoticed. It is my opinion that jumping on these two dividend “gifts” could be potentially profitable for any dividend growth portfolio.

While we have been watching the markets continue to defy gravity, both AT&T (T) and Altria (MO) have slipped well into my “buy zone.” Not only are the dividend yields super appealing, but the share prices of each are shouting loud and clear that you should consider buying shares right now.

Don’t misunderstand; the share prices can dip further and if their balance sheets lose their luster to necessitate dividend cuts, these gifts could become Trojan horses. You still need to decide for yourselves, but honestly if I were in the market again, I would ease into these dividend aristocrats without hesitation.

Look At These Potential “Rainmakers”

ChartData by YCharts

For AT&T, the share price is tantalizingly close to a 10-year low. That alone is remarkable since T has a strong balance sheet, great cash flow, and enough coming in to continue paying its debt as well as its dividend.

Source: Fidelity

Just by looking at the basic fundamentals, we can see T is somewhat undervalued, a very high-quality equity, and is extremely strong financially. With these are very basic fundamentals I would be hard pressed to make a negative case about the stock right now. Yes, we all know about the debt, as well as the missteps, but the company keeps moving along and the yield plus the share price are mouthwatering.

Source: Fidelity

Digging a bit deeper, I cannot ignore the book value compared with the current share price, the free cash flow and the cash flow growth, in spite of the headwinds the company has been facing.

If nothing else, this stock could be considered a bond proxy with a lofty yield that remains consistent.

T has also announced its next dividend, and next quarter should be slightly increased to maintain its aristocrat status.

Say what you will but there is no denying the facts, folks. T should be purchased right now! Take a look for yourself and given these facts, explain to me why you would not consider buying T at these levels.

Altria is a bit of a different story. It is not near multiyear lows, but the share price is pretty close to the March correction price!


As a matter of fact, the stock is considered a buy by many Wall Street analysts:

Source: Fidelity

Given the precarious nature of tobacco sales, this rating does not surprise me. This is one company that always has pricing power. Smokers who continue to smoke will pay the price. The company is extremely profitable, and although it faces declining sales, perhaps the marijuana market – which MO is a part of – will eventually make up plenty of revenue in the future.

Again, say what you will about this “sin” stock, but it too is an enormous cash cow with cash flow and cash flow growth to pay its dividend and its debts. With an amazing yield, this stock can also make a huge difference in your dividend portfolio.

Source: Fidelity

The basic fundamentals are more than impressive, especially when it comes to the quality of the company. The stock is quite undervalued, and the balance sheet is quite healthy! When you can have this dividend king in your portfolio, I believe you will greatly enhance your potential for growth, both in income as well as capital gains.

It does not take a rocket scientist to see how much of a gift MO is offering dividend growth investors. Seriously, even if this doesn’t last for another 51 years, what about in the near term? Yes, we all know the issues with vaping, and lower smoking levels, but what other argument is there to not consider MO as a key part of your dividend portfolio?

With Enough Idle Cash, T and MO Could Pay You Better Than Almost Any Other Investment

Let’s say you have $200,000 in idle cash that you have sitting there doing nothing. By investing $100,000 in each of these stocks, you could generate a lofty income for yourself of roughly $16,000-17,000 annually in just these two stocks alone. Don’t forget that both of these stocks are dividend aristocrats, so the likelihood of increasing the dividends is extremely strong.

I believe this is a must for dividend investors to research and truly consider them. I personally consider both of these stocks a very strong buy at current levels.

My Bottom Line

I realize, and so do you, that nothing is risk free or guaranteed. But as of right now, I cannot think of 2 better dividend aristocrats to have in every dividend growth investor’s portfolio. I also realize that everyone writes about these two stocks almost daily, but how can I pass up these opportunities to my own readers?

The worst-case scenario, that I can see, is a total collapse of the markets as a whole. Of course I also do not have a crystal ball as to the lurking wolves behind each company, which is why you must do your own research and decide for yourself.

Are you folks considering these two stocks?

Not To Bore You, But…

Knowledge is power, and many folks shy away from the investing world because that very world makes it more confusing each and every day in an effort to sell you something.

My work here will remain free to all of my followers (unless it is an Editor’s Pick! Then the article will be openly available for only 24 hours or so. But I have no Marketplace service). My hope is that I’ll give you some of the things that took years for me to learn myself.

One final note: The only favor I ask is that you click the “Follow” button and become a real-time follower to receive emails that my articles have been published, and so I can grow my Seeking Alpha friendships. That is my personal blessing in doing this and how I can offer my experiences to as many regular folks as possible who might not otherwise receive it.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: The opinions and the strategies of the author are not intended to ever be a recommendation to buy or sell a security. The strategy the author used in his past worked for him, and it is for you to decide if it could benefit your financial future. Please remember to do your own research and know your risk tolerance. One more thing…I have no equities since I divested everything about 2 years ago due to very serious health issues and my personal circumstance.

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