In some ways, the loyalty of the baby boomers is surprising. AT&T (NYSE: T) Stocks are only 35% down from their 2016 high, but are priced about half of their 1999 high. Indeed, last month the stock hit new lows. of 52 weeks, highlighting his consistently poor performance.
In other respects, however, it’s not too hard to understand the baby boomers’ continued desire to hold onto their AT&T position. Despite its problems (and there are many), AT & T’s dividend continues to grow. He’s grown at least a little bit every year for the past 36 years (which qualifies him for dividend aristocrat status), and the payout as part of the income is pretty generous as well.
There is also something of an “X factor” buried in the affinity of older investors for the telecommunications giant. They probably grew up with the company, watching it grow to the power it is today.
AT&T delivers reliable income – and nostalgia
Don’t misinterpret the message. Apple is the # 1 choice right now among all investors, regardless of age, according to data from Apex Clearing and the brokerage firm Charles Schwab. This may be more a function of its size than its plausible outlook. With Apple’s market cap of $ 2 trillion, not only are other stocks out of sight, but it’s also easy to learn more about the mainstream tech giant. same for me Amazon, which is the # 2 choice for all investors these days.
If there’s one choice that baby boomers clearly love more than millennials, it’s AT&T.
As noted, the dividend arguably plays an important role in the interest of older investors. It has been paid religiously since the 1980s and has increased every year for the past 36 years. Even the difficult times following the dot-com collapse of 2000 (which also affected telecommunications) or the recession caused by the mortgage crisis the company’s regular cash payments to shareholders. And in some of those years, paying was not easy. But AT&T has found a way.
Investors tacitly appreciate their commitment to continue paying dividends. As these investors age towards retirement, this reliable income has become all the more important.
However, there is another, less obvious reason why baby boomers have stuck with this less than impressive name for so long: nostalgia.
It has been largely forgotten by older investors and never made by younger ones, but today’s AT&T is – again – akin to the AT&T of yesteryear. . It’s the messy culmination of multiple acquisitions and spinoffs involving Southwestern Bell, BellSouth, Cingular, Comcast and others.
When you hear your elders talking about ‘Baby Bells’ and ‘Ma Bell’, they talk about the smaller outfits that would eventually re-form as AT&T from the 1980s, after the Department of Justice separate the larger Bell Company. However, the name AT&T itself has been around for over a century, even though it was called American Telephone & Telegraph in its early days.
Sometimes it’s nice to own a part of a business that has been around as long as you have been! Such options are pretty slim these days.
Johnson & Johnson receives honorable mention
AT&T isn’t the only name baby boomers have a clear affinity for what their children or grandchildren don’t. Johnson & johnson (NYSE: JNJ) is another clear favorite of older investors.
There are many parallels between J&J and AT&T, but poor performance is not one of them. Johnson & Johnson’s shares have outgrown the vast market for the past three decades, despite their liability for the asbestos found in their baby powder. While most investors may not fully appreciate it, the company is no longer just baby dressings and shampoo. More than half of its turnover is generated by sales of prescription drugs.
The fact that most baby boomers used Band-Aid brand bandages and Johnson & Johnson baby shampoo doesn’t diminish the company’s appeal to these investors. Its dividend either. J&J has increased his annual payout for 58 straight years now, making him a dividend aristocrat, but also one of the few dividend kings.