10K, what if you went with AT&T?= clue, is a negative value
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I will take a few snippets from several posts to say this. Seeing a Fidelity CFP is a good idea, my biggest regret today is not doing it sooner. Charts & graphs can make your eyes glaze over, but the right person can put all in perspective in an up, or down market. My guy typically sits with me for 90 minutes every time....no rushing and all questions answered and he even raises a few good thoughts.
To the OP, as long as a legitimate stock (AT&T, or even Exxon XOM) pays consistent dividends...reinvested...it is not dead money. After all, If we all made perfect stock picks, why would we be posting here and complaining? We’d be retired, “sitting on a beach earning”.....well you know.
Long term investing takes patience and discipline, which means continuing to invest in a seriously down market = dollar cost averaging. DCA forces that discipline, use it!
Someone posted, “if you’ve got 10K to invest, AT&T wouldn’t be what I’d recommend.” I agree, I’m not a big fan of dumping lump sums into any stock, or mutual fund. But small, consistent amounts within you’re 401K, even in AT&T, is not the worst thing you can do.
Call me a Tortoise too.
Well said @ssp, I’ve been collecting a little of T, each and every month, since about ‘90 within my 401k among many wide investments. My cost basis is very low to a point where it has become its own annuity, when the time comes.
If I had one piece of advice for pass down to younger savers, AT&T has a relationship with Fidelity
Investments. Start a conversation early, let them guide you. If you survive the cuts, you might be on your way to an early retirement, but don’t rely on what you think are superior investing skills. None of us are even half as smart as we think we are, and an outside opinion could put you on the right path.
Oh, and to make a point about the Split History Source someone used AT&T for.....Exxon Mobile (XOM) wishes they had T’s reinvestment good fortunes. Who would think a huge corporate company like them would be stuck in the mud?
@ipa, a fair point at first glance, but I didn’t “miss” the OP’s original point, I (dis)missed it as being a silly ‘what if’ scenario. Gee, what if I bailed my entire portfolio out of the market in mid-September ‘08 and got back in early March of ‘09! The comparison suggest knowing the future and I doubt this person ever owned Apple, much less a thousand share ten year ago.
I simply took a contrary position, after researching, that the OP’s assertion that AT&T “is a negative value,” (alluding to it being dead money) and i believe I showed that belief as 83% incorrect.
And, yes of course I used the ‘dividend reinvestment to make my point!’ Variable, or not, any brokerage outfit that tracks AT&T, and others, look closely at free cash flow and the ability to pay the quarterly dividends, among many other measures, to decide if a stock is worth investing in, or recommending.
Come September, AT&T will be a consistent dividend payer since 1984....34 years. T is not flashy, but dependable dividends will supplement my income one day
to my young apprentice:Post ID: @UtcoCnW
Great insight! I wrote something very similar for later this week about how I am leery of dividend payers right now with the speculation revolving around the Fed and rates. I think they have their place in a well diversified portfolio, but you’re NOT right, the younger you are the more you should be leaning towards growth stocks. This is, of course, assuming you’re doing you’re due diligence and being wise about what growth stocks you’re going into. Even as I am staring down the big 4-0 I am leaning towards growth stocks as I have a pretty high risk tolerance and have been able to do fairly well with them.
but the stocks with such high yields aren’t likely to keep them for long. In fact, it’s probably a cause of concern, since their share price may have recently crashed to cause such high yields. If the price decline was due to short-term market noise, that’s fine, but if there are significant underlying fundamental problems.
Overall, I agree with OP point of view. "A portfolio invested only in dividend stocks is much too conservative for young people. But dividend stocks can be viable for diversification as you get older or as you begin to draw income from your portfolio.
A soooofunny, the only ones buying stock are Randalls directors, today 3.3 M in stock
Regarding your 401K, you can invest in any stock you wish by opening a brokerage account within your 401K, including Apple.
Love the detailed response, but I feel like you totally missed the original poster’s point, and the reinvestment of the dividend was a variable you injected to make your point. Keep in mind, many people use dividends to supplement their income.
If you’ve got 10k right now to invest, AT&T wouldn’t be what I’d recommend to invest in. Not by a long shot.
Ok Grasshopper, time for your re-education to the Beginners Guide to Investing.
Buy 10K of AT&T 10 years ago, 08/04/08 at $30.17...fast forward to 08/03/18 at $31.85 (yes, not exactly a booming growth stock I grant you) but here is what you missed. The reinvested dividends, every quarter, 40 quarters of reinvesting...over and over, continually buying more shares EVERY SINGLE QUARTER. The Compound Avg Growth Rate (CAGR) was over 83% for those ten years
That 10K, without lifting a finger and the Dividends Reinvested grew to $18,369.90
Not everyone gets in on an Apple, but Apple isn’t offered in my 401K...my choices are limited. But here’s the thing, i am socking away almost $20K in my 401K, safely and very long term, and out of the govt pockets until I wish to bring it out or the Required Mininum Distribution, at age 70 1/2 makes me. The whole time the company is giving me a fair dollar match.
Let those who wish to run with the Hares have their fun, I will be the Tortoise.
Good luck
Info Source: Split History.com