December 20, 2011

My Investments in AT&T and Verizon

I own shares of AT&T (T) and Verizon (VZ) in my Roth IRA account.    I bought them because they are solid blue chip companies, they had relatively low PE and relatively high dividend yields.   I figured that both companies have decent income from a wide and stable business base. 

First the AT&T:

I bought 56 shares for $29.41 in November 2008 for a total cost of $1646.96.   Since then I've gotten $282.24 in dividends.   Currently AT&T trades at $29.01 so my 56 shares are worth $1624.56.     I'm up $259.84 total in just over 3 years.   Thats annual growth of just about 5% per year.  

Now the Verizon :

I bought my Verizon shares in January 2010.   I paid $1374.11 to get 44 shares at $31.23 each.     Today Verizon is worth $38.35.   Verizon has paid out $149.60 in dividends.    In July 2010 I got 10 shares of Frontier Communications as part of Verizon selling off some of their business to Frontier.  Frontier trades at $5.13 so my shares are worth $51.30.  I've also gotten $13.43 in dividends from them.  

My initial $1,374.11 is now worth $1,901.73 total.   Thats a 38% increase in just under two years.  This equates to about 17% annual growth.

Versus Benchmark

In about 3 years my AT&T shares have grown around 5% per year average.   In that same period the S&P 500 went from 970 to 1236.   That equates to around 8.4% annual growth.  My AT&T investment has underperformed the S&P 500 by a ways.

On the other hand my Verizon investment has grown 17% annually for the 2 years that I've owned it.  The S&P 500 went from 1150 to 1236 in that period and so only grew about 3.6% annually over the two years.

My AT&T investment did worse than the S&P 500 but my Verizon did better.   Combined I'm beating the index.  Between my AT&T and Verizon I'm up about 25% total.   If I'd instead bought the S&P 500 I'd be up about 18% now.

Today the PE for AT&T is at 14.7 and the dividend yield is 5.9%.   Verizon is PE of 15.4 and dividend yield of 5.2%.   They aren't any more or less attractive from when I bought them.   I am going to continue to hold for now.

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