Author: Chris Santiago
Covestor model: Dividend Value
Disclosure: Long T, FCX
Here are two positions I recently added to:
AT&T (T), one of the largest communications companies in the world, dominates land lines in the U.S. and is also the second largest wireless carrier. The company has great free cash flow and has generated very good returns on invested capital over the past decade. It has been a consistent dividend-payer and is a significant holding within the portfolio. The stock price has declined over the past three months, but has outperformed the S&P 500 during the same period. At current prices, we believe AT&T presents a good value and a great yield, around 6 percent as of the beginning of October.
Freeport McMoran (FCX) is the world’s largest publicly traded copper miner. The company’s shares have suffered recently, reflecting lower copper prices and fears of a slowing global economy. The stock’s decline brought our actual allocation much lower than our target allocation; that, along with a mid-single-digit P/E ratio and a dividend yield approaching 3 percent as of the beginning of October, made for an easy decision to re-align the FCX position.
Looking forward and should stock prices decline further, 3M (MMM) will also be on our radar as the yield approaches and perhaps exceeds 3 percent.
