Tuesday, December 14, 2004


In the old days, T was the stock for widows and orphans. It was a safe place for all. Back before money market accounts existed, investors would park their excess money in T because the dividend was better than the rate on savings.

This morning, we added shares of T to one of our monitored accounts. After all, the stock pays an 85% income tax free dividend that is more than the taxable interest paid on a ten year treasury bond!

One would assume that there is great risk in these shares but I don't see it. The company is throwing off cash flow of 13% per year. The financial position is improving. The company serves 4 million small and large businesses and it gets 72% of its revenues from these customers. Verizon has a market cap ten times the size but it has revenues of about 2 times!

This is not a growth stock. Revenues have declined for years. However, the core business is solid and we are getting down to the core. Growth of video and data may turn around the revenue declines. In my opinion the down-side is limited. Family members own the stock on margin and our dividend is more than the interest cost. BUY T with confidence.