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Is AT&T a Good Holding for Dividend Growth Investors?


AT&T is not a growth stock. When a recent article looked at the price compared to the S&P 500, there is no comparison.

This price appreciation does not include dividend growth, however.

When adding in the dividend, AT&T still trails the S&P, but it provides a good deal of income.

The solid income stream makes AT&T a great cornerstone stock for a dividend growth portfolio.

As an investor in AT&T (NYSE:T), a couple of recent articles on Seeking Alpha have caught my attention. The first cited an article on Investor's Business Daily that correctly pointed out that AT&T's price had only appreciated around 19 percent over the past 20 years. This trailed the S&P over the same time period, which was up about 256 percent. The second argued that AT&T's dividend was a "red herring." These two articles caused me to wonder what a dividend investor might have gotten out of their investment over the past 20 years, as I'm hoping to get paid for the next 20 years after my initial recent investment.

AT&T is definitely not a growth stock, and investors who invested hoping to see a big run-up in the stock's price around 1995 would have been increasingly disappointed over the long run. What these numbers do not take into account is the power of the dividend. When dividends are reinvested, the return of the S&P 500 would look more impressive than the 256 percent return stated. AT&T would look better as well when taking its ever-increasing dividends into account.

The "Real" Returns for AT&T Investors

I went to the AT&T investor website to get some information on the dividend...