"I remain optimistic that now is a good time to be purchasing high-yielding assets," says growth and income expert Bryan Perry.
Indeed in his industry-leading The Cash Machine, the advisor adds two growth and income picks to his buy list: AT&T (NYSE: T) and Verizon (NYSE: VZ). Here's his assessment.
"Even if you are forecasting a recovery in mid to late 2010, you should be aggressively buying strategic high-income assets over the next three to six months.
"Here's why: As a rule, the market looks out six to nine months when it prices assets. That means, we can expect the equity and corporate bond markets to remain range-bound for only about another ninety days before the major averages break out to the upside.
"It will seem odd for the stock market to take off as the unemployment rate keeps rising, but that's just what will happen at some point over the summer.
"Both AT&T and Verizon have great strategies in place: AT&T with its exclusive relationship with the Apple iPhone, and Verizon's hugely successful rollout of FIOS.
"Verizon's FIOS service bundles Internet, high-definition TV and land line phone as well as wireless services so that all appear on a single billing statement.
"Whoa, now that's progress -- and simplifying the dizzy act of managing all our communication needs is key to any telecom company succeeding to today's demanding market.
"The gradual shift from cell phones to smart phones like the BlackBerry is only going to drive data revenue higher. More applications like e-mail, live quotes, music, movies, online gaming, directions and text messaging is only going to be a bigger part of every user's life.
"It's just a matter of time, but the smart phone wave is tsunami-sized, and AT&T and Verizon stand to gain big from this new technology.What's even better is that it gets really simple when dealing with common stocks as to whether there is sufficient cash flow to cover the state dividends.
"I'm happy to report the both companies have excellent dividend coverage. The payout ratio for AT&T is 74% and for Verizon, the payout ratio is 77%.
"As the economy turns back up, revenues and net income for both companies will improve, taking down the payout ratios from current levels. In the worst of all economic cycles since the depression, AT&T and Verizon have stood by their dividends like the fortress stocks they are.
"Now, we get a chance to lock in 6%+ dividend yields after both companies raised their dividend payouts and plant the flag in the telecom space with the two leaders in the telecom services industry. Getting paid is a nice way to get started."
Steven Halpern's TheStockAdvisors.com offers a free daily overview of the favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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Reader Comments (Page 1 of 1)
9-02-2009 @ 11:20AM
kpinvest said...
I think it's important (quite) to note that the exclusive agreement between Apple and AT&T end next year, and Verizon is talking to Apple about bringing the iPhone to their network. As far as I know, the hang-ups to this agreement is Verizon wants their vCast on the iPhone, where Apple wants to continue to use iTunes.
If they do get this hammered out, I think a lot of people who are unhappy with AT&T will quickly bail and switch to Verizon. Spotty service, slow connections, and missing voicemails and SMS messages is just too frustrating for some people to deal with, and people will flock to VZ.