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Replacing ABT with AT&T (T)

For the reasons I wrote in my previous article I am replacing Abbott with AT&T stock. This stock paid dividends since 1881 and it has a history of 8 years of increasing the dividend. Currently the stock is trading below 200 day MA and it pulled back due to ex-dividend date which was today (Jan-08, 2013). The company increased its dividend recently.

The stock created a corrective pattern and thus I am initiating a first buy and I opened a contingency order for tomorrow morning. If the stock rises above 34.70 I will open a limit order of 34.74 per share to buy 31 shares of this stock.

If the trade executes tomorrow, I will own 31 shares of AT&T which will bring me $55.8 annual dividend instead of $19.04 dividend provided by ABT.

If the stock surpasses the limit price, the order will not execute and I will continue waiting for next pullback.

AT&T

The daily chart above indicates the price action of AT&T. We are below 200 day MA, dropping back down (and the stock may drop even further) and getting close to the 3 year long term trend support line (the thick green line). Short term indicators such as CMF, MACD indicates rising interest in the stock, the ultimate oscillator is in overbought, which may indicate further drop of price.

AT&T 3 year chart

The 3 year chart show the price at the support line (the thick green line) bouncing off of the lower standard deviation Bollinger Band while staying slightly above 50 day MA (which is very positive indicator). However money flow CMF indicates heavy selling during this period. MACD seems to be slowing down its downward move and may create a divergence (which however may fail) and Ultimate oscillator is neutral.

AT&T has a dividend rate at $1.80 (5.00 % yield), 5-year annual dividend yield growth 4.8% and consecutive dividend increase for 8 years. The stock seems to be overvalued, however I am willing to initiate the trade if the price meet my trigger or wait for it if it doesn’t.

As far as ABT, I may get back to this stock and buy those shares back when I will be able to see and know more about this stock.





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