Surprisingly it was announced today that Apple Inc will replace AT&T in the Dow Jones Industrial Average. The actual change is expected to occur after the close on March 18. This is surprising only because changes in the DJIA don't happen very often. In fact it's actually pretty rare.
Those mutual funds that are based on investing in the DJIA will, as a result, have to readjust their holdings to reflect the change by buying shares of Apple Inc and selling shares of AT&T. Generally this will put upward pressure on the shares of Apple and downward pressure on the shares of AT&T. Understanding this the average investor will decide to invest in Apple. And that seems to make sense. But it only makes sense if you can buy the stock now (or better yet yesterday!) in anticipation of it going higher.
But what about AT&T? It's already selling off. Yesterday you could have bought it for $34.00 per share. Tonight it's selling for $33.48 per share. With an annual dividend of $1.88, AT&T was yielding 5.52% yesterday and 5.61% tonight. If the stock retreats to the recent low seen in late January of $32.02, the dividend yield will be 5.87%. If it retreats to the low seen in mid-December $31.24, the dividend yield will be 6.01%. That's a phenomenal yield for a quality company like AT&T. In addition, a return to a stock price of $34.00 would result in a capital gain of 8.83%. That would be a nice total return on investment.
I point all this out because the obvious conclusion is not always that obvious. Sometimes there's an equally great deal I'm not understanding or missing. There's a lot of money to be made investing in the markets but you can't make money without thinking.
Good Luck and Good Trading.
Those mutual funds that are based on investing in the DJIA will, as a result, have to readjust their holdings to reflect the change by buying shares of Apple Inc and selling shares of AT&T. Generally this will put upward pressure on the shares of Apple and downward pressure on the shares of AT&T. Understanding this the average investor will decide to invest in Apple. And that seems to make sense. But it only makes sense if you can buy the stock now (or better yet yesterday!) in anticipation of it going higher.
But what about AT&T? It's already selling off. Yesterday you could have bought it for $34.00 per share. Tonight it's selling for $33.48 per share. With an annual dividend of $1.88, AT&T was yielding 5.52% yesterday and 5.61% tonight. If the stock retreats to the recent low seen in late January of $32.02, the dividend yield will be 5.87%. If it retreats to the low seen in mid-December $31.24, the dividend yield will be 6.01%. That's a phenomenal yield for a quality company like AT&T. In addition, a return to a stock price of $34.00 would result in a capital gain of 8.83%. That would be a nice total return on investment.
I point all this out because the obvious conclusion is not always that obvious. Sometimes there's an equally great deal I'm not understanding or missing. There's a lot of money to be made investing in the markets but you can't make money without thinking.
Good Luck and Good Trading.
| Apple Inc. designs, manufactures, and markets mobile communication and media devices, personal computers, and portable digital music players worldwide. The company also sells related software, services, accessories, networking solutions, and third-party digital content and applications. It offers iPhone, a line of smartphones that comprise a phone, music player, and Internet device; iPad, a line of multi-purpose tablets; Mac, a line of desktop and portable personal computers; and iPod, a line of portable digital music and media players, such as iPod touch, iPod nano, and iPod shuffle. The company also provides iTunes app and the iTunes Store; Mac App Store that allows customers to discover, download, and install Mac applications; iCloud, a cloud service; Apple Pay for making mobile payments; Apple TV, a portfolio of consumer and professional software applications; iOS and OS X operating systems software; iLife, a consumer-oriented digital lifestyle software application suite; iWork, an integrated productivity suite designed to help users create, present, and publish documents, presentations, and spreadsheets; and other application software, including Final Cut Pro, Logic Pro X, and its FileMaker Pro database software. In addition, it offers various Apple-branded and third-party Mac-compatible and iOS-compatible accessories, including headphones, cases, displays, storage devices, and various other connectivity and computing products and supplies. The company sells and delivers digital content and applications through the iTunes Store, App Store, iBooks Store, and Mac App Store; and sells its products through its retail stores, online stores, and direct sales force, as well as through third-party cellular network carriers, wholesalers, retailers, and value-added resellers. It serves consumers, and small and mid-sized businesses, as well as education, enterprise, and government customers. The company was founded in 1977 and is headquartered in in Cupertino, California. (Summary) (Company) (Daily Chart) |  Price $126.60 Target $135.88 1yr Cap Gain 7.33% Dividend $1.88 Yield 1.48% Tot 1yr Return 8.82% 3yr DivGR UNK 5yr DivGR UNK |
| AT&T Inc. provides telecommunications services in the United States and internationally. The company operates through two segments, Wireless and Wireline. The Wireless segment offers data and voice services, including local, long-distance, and network access services, as well as roaming services to youth, family, professionals, small businesses, government, and business customers. This segment also sells various handsets, wirelessly enabled computers, and personal computer wireless data cards through its owned stores, agents, or third-party retail stores; and accessories, such as carrying cases, hands-free devices, batteries, battery chargers, and other items to consumers, as well as to agents and third-party distributors. As of December 31, 2014, it served approximately 120 million wireless subscribers. The Wireline segment provides switched and dedicated transport, DSL Internet access, network integration, managed Web-hosting, packet, and enterprise networking services, as well as intrastate, interstate, and international wholesale networking capacity to other service providers. It also offers voice services consisting of local and long-distance services; and wholesale switched access services to other service providers, as well as sells customer premises equipment and other equipment comprising basic telephones and private digital switching systems. This segment served 9 million retail consumer access lines, 9 million retail business access lines, and 2 million wholesale access lines. The company was formerly known as SBC Communications Inc. and changed its name to AT&T Inc. in November 2005. AT&T Inc. was founded in 1983 and is based in Dallas, Texas. (Summary) (Company) (Daily Chart) |  Price $33.48 Target $34.19 1yr Cap Gain 2.12% Dividend $1.88 Yield 5.62% Tot 1yr Return 7.74% 3yr DivGR 2.28% 5yr DivGR 2.36% |
Print 
PDF
RSS Feed
