{"id":69310,"date":"2023-10-06T02:05:28","date_gmt":"2023-10-06T06:05:28","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/att-a-strategic-choice-to-increase-portfolios-dividend-yield-and-reduce-risk-level-t\/"},"modified":"2023-10-06T02:05:33","modified_gmt":"2023-10-06T06:05:33","slug":"att-a-strategic-choice-to-increase-portfolios-dividend-yield-and-reduce-risk-level-t","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=69310","title":{"rendered":"AT&T: A Strategic Choice To Increase Portfolio\u2019s Dividend Yield And Reduce Risk Level (T)"},"content":{"rendered":"
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Investment Thesis<\/strong><\/h2>\n

Have you ever contemplated the construction of a dividend income investment portfolio with a reduced risk level that aims to achieve an attractive Total Return, while incorporating both high dividend yield and dividend growth companies? To combine these goals is the essence and objective of The Dividend Income Accelerator Portfolio.<\/span><\/p>\n

With last week\u2019s incorporation of Apple (NYSE:AAPL) into The Dividend Income Accelerator Portfolio, we strived to optimize the portfolio regarding risk and reward. I believe that Apple provides investors with a relatively low risk level while offering an attractive expected annual rate of return, making the company from Cupertino an excellent risk\/reward choice for investors. Due to Apple\u2019s attractive risk\/reward profile, I plan to overweight the Apple stock within The Dividend Income Accelerator Portfolio.<\/p>\n

However, the inclusion of Apple into The Dividend Income Accelerator Portfolio also caused the Weighted Average Dividend Yield [TTM] of the portfolio to decrease to 3.66%.<\/span><\/p>\n

For this reason, I have been focusing on picks that could help us to raise the portfolio\u2019s Weighted Average Dividend Yield [TTM], since one of the portfolio\u2019s objectives is to help you generate a significant amount of extra income via dividend payments.<\/p>\n

One of the industries in which you can generally find companies that can pay a relatively attractive Dividend Yield is the Integrated Telecommunication Services Industry: both Verizon (NYSE:VZ) and AT&T (NYSE:T<\/span>) currently pay a relatively attractive Dividend Yield (while Verizon\u2019s Dividend Yield [FWD] stands at 8.17%, AT&T\u2019s is at 7.40%).<\/p>\n

Even though I consider Verizon the slightly more attractive choice when compared to AT&T (due to its higher Dividend Yield [FWD], its higher Dividend Growth Rate, and its higher Revenue Growth Rates), I have decided to select AT&T over its competitor.<\/p>\n

The reason for this is that SCHD (NYSEARCA:SCHD) represents the largest proportion of The Dividend Income Accelerator Portfolio and this ETF is already invested in Verizon (with a proportion of 3.90%). I did not want the concentration risk to become too high for investors of The Dividend Income Accelerator Portfolio.<\/p>\n

Nevertheless, I do not believe that AT&T is such an attractive risk\/reward choice as Apple is, for example. I believe that the risk level for AT&T investors is not particularly low (reflected by the company\u2019s relatively high Total Debt to Equity Ratio of 142.91%), and I believe that the reward for AT&T investors is relatively limited (due to the company\u2019s limited growth perspective).<\/p>\n

For this reason, I plan to underweight the AT&T stock within The Dividend Income Accelerator Portfolio. AT&T\u2019s currently relatively high proportion of the overall portfolio will decrease within the coming weeks, when additional companies will be added.<\/p>\n

However, I believe AT&T can play a significant role in the portfolio to help increase portfolio’s Weighted Average Dividend Yield and decrease its volatility and risk level.<\/p>\n

The Dividend Income Accelerator Portfolio<\/em><\/strong><\/h2>\n

The Dividend Income Accelerator Portfolio\u2019s<\/em> objective is the generation of income via dividend payments, and to annually raise this sum. In addition to that, its goal is to attain an appealing Total Return when investing with a reduced risk level over the long-term. <\/em><\/p>\n

The Dividend Income Accelerator Portfolio\u2019s reduced risk level will be reached due to the portfolio\u2019s broad diversification over sectors and industries and the inclusion of companies with a low Beta Factor. <\/em><\/p>\n

Below you can find the characteristics of The Dividend Income Accelerator Portfolio:<\/em><\/p>\n