When legendary investors such as Warren Buffett and John Paulson take action, others should take note!
That should focus investor attention on Verizon Communications (NYSE: VZ) and AT & T (NYSE: T). Buffett has loaded up on shares of Verizon for the portfolio of Berkshire Hathaway (NYSE: BRK-A). Billionaire investor John Paulson has joined in for his hedge fund, too. Many others will follow now that the holdings of these two legends has been made public.
There are many reasons for the massive buys by two of the best.
A huge appeal is the dividend income of each. According to John Bogle, another legendary investor, dividend income has provided more than 40% of the total return for stocks. That means that in many market conditions, the dividend income has been the only positive return.
For AT&T and Verizon Communications (chart below), that is especially true.
At present, the average dividend yield for a member of the Standard & Poor’s 500 Index (NYSE: SPY) is under 2 percent. Both Verizon Communications and AT&T have more than double that amount. Verizon Communications has a dividend yield of more than 4.3 percent. The dividend yield for AT&T is over 5 percent. The income component of both of these stocks attracts long term investors, which is always desirable.
There is plenty of cash to increase the dividend of each to reward long term shareholders.
Both Verizon Communications and AT&T will have solid growth ahead. That is especially true with data usage and being content providers. Pricing power has shifted from Apple (NASDAQ: AAPL) to AT&T and Verizon Communications. That is obviously a huge part of the buy by John Paulson and Warren Buffett. The economic moat of investing always lures Warren Buffett. It should also prove to be appealing to other investors too regarding Verizon Communications and AT&T, especially for those seeking income from their holdings.