2) AT&T (T) pays a 5.8% dividend. The telecommunications giant has made payouts since 1984 and has increased dividends steadily over the last 26 years. If completed, AT&T’s merger with T-Mobile USA will make it the No. 1 wireless operator in the U.S. (At press time, the U.S. Justice Department filed an antitrust lawsuit to block the proposed acquisition.) The union should bring about operating savings that will fully offset the purchase price. Over the past five years, AT&T has grown its dividend about 5% per year on average. We expect a 2% growth rate in the next five years. We expect revenue growth in a stabilizing economy thanks to AT&T’s wireless and television businesses.
STOCK PRICE: $28.79 • DIVIDEND YIELD: 5.8%
3) Kinder Morgan Energy Partners (KMP) which operates oil and gas pipelines and storage facilities, pays a 6.6% dividend yield. Kinder Morgan has some 28,000 miles of pipelines used to transport natural gas and refined oil. The company has paid a dividend since 1992 and has increased its payout to investors the last 14 years running. We think Kinder Morgan can generate low double-digit income earnings growth this year, reflecting acquisitions and increased demand for storage capacity. For the past decade this dividend stock has delivered annualized total returns of 19.5%. What’s more: A $10,000 investment in Kinder Morgan 20 years ago would be worth $190,000 today. In the next year, the company plans to build up its energy transportation and storage assets—one reason we think it is insulated from any decrease in oil or gas prices.
Stock Price: $70.56 • DIVIDEND YIELD: 6.6%