Author Topic: AT&T stock  (Read 823 times)

texastumbleweed

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AT&T stock
« on: May 19, 2017, 09:17:52 AM »
So I've been helping my parents clean up their IRA's and have moved a lot of individual stocks to ETF's, but a few stocks are troubling me.  My mom bought several "blue chip" stocks for their dividends and one is AT&T and the other is Disney.  She doesn't have a ton in disney, but it is down 5% from where she bought it. I could take the loss, only about $500.  More importantly though is that she has a huge amount of her overall account on AT&T and it is down 7% or about $7000.  Do I take this large loss or ride it out for a while.  She is 55. 

Thanks.

Vindicated

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Re: AT&T stock
« Reply #1 on: May 19, 2017, 09:26:20 AM »
This question is essentially timing the market.  There is no way to know for sure what will happen.

While it's not likely either of these stocks is in for a big dip in the near future, a safer bet would be to pull it out and put it into ETFs.

But if you're asking for a prediction from someone that has no idea:

Personally, I would sell AT&T and keep Disney.  Then take what you sold AT&T for and put it into Vanguard or similar.

7% of current AT&T would mean she bought around $40.  The stock has been under $40 more than over $40 for the past 15 years, and hasn't been above $50 since early 2001.

Disney is trending upward consistently, and they own so many huge licenses, I can't see them plateau.  Marvel, Star Wars, and Classic Disney titles will be popular for the rest of our lives.
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L.A.S.

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Re: AT&T stock
« Reply #2 on: May 19, 2017, 09:52:19 AM »
So I've been helping my parents clean up their IRA's and have moved a lot of individual stocks to ETF's, but a few stocks are troubling me.  My mom bought several "blue chip" stocks for their dividends and one is AT&T and the other is Disney.  She doesn't have a ton in disney, but it is down 5% from where she bought it. I could take the loss, only about $500.  More importantly though is that she has a huge amount of her overall account on AT&T and it is down 7% or about $7000.  Do I take this large loss or ride it out for a while.  She is 55. 

Thanks.

IF ~100K in AT&T is considered a "huge" amount as far as the portfolio is concerned, then I would suggest reallocating in an index fund.

Any money that would be lost is a sunk cost.  If the money were not invested in a position that is down, but was just sitting in cash, how would you invest it today?  There's your answer. 

There is no guarantee that the individual stock will ever get back up to the point that the unrealized loss is made back up.  Or if it does, there is no guarantee that you would not have been better off just placing the money in a mutual fund.

If she resists, and wants to have an individual stock, I'd suggest letting her keep the 10K in Disney as a way to split the difference.  At least this company has a huge competitive advantage and wide moat through extremely long US copyright terms and other intellectual property rights and the fact that they have found the magic formula to continue to turn out high quality media and entertainment.  I'd  ditch the AT&T. 

Proud Foot

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Re: AT&T stock
« Reply #3 on: May 19, 2017, 11:15:46 AM »
Since she is only 55 I would go ahead and pull the plug on the AT&T stock. If she was older and retired you might have more of an argument to keep it based upon the dividend and her using the income.  Roughly calculating based upon your statement of down 7% or $7,000 I figured her having around 2,432 shares which would kick out approximately $4,766 in dividends each year.  Obviously you would want to consider more than just this but since she is only 55 I wouldn't do it.  When you say huge amount of overall account, how much of her total investments is in AT&T?

talltexan

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Re: AT&T stock
« Reply #4 on: May 19, 2017, 12:30:28 PM »
I don't understand the purpose of owning DIS for its dividend. Its yield is less than that of VTI. Your mom may have other reasons she wants to own DIS (I have considered it in the past when it was in the low 90's).

trollwithamustache

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Re: AT&T stock
« Reply #5 on: May 19, 2017, 02:08:29 PM »
T currently pays $0.49 a quarter, up a penny from last year. So she isn't really down 7 %, she got 1.93 per share over the last 4 quarters and can reasonably expect 1.96 for the next year.

texastumbleweed

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Re: AT&T stock
« Reply #6 on: May 19, 2017, 07:42:57 PM »
Thanks for all of your responses.  I went and looked again and it looks like the last purchase she made was last year so she is only down 7% when you account for dividends and older purchases that were smaller but are up.  So the average is 7%. I'm thinking now that I will let the dividends pay out a few more quarters then switch when it is closer to break even.  Thanks!

runewell

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Re: AT&T stock
« Reply #7 on: May 21, 2017, 06:01:48 PM »
So I've been helping my parents clean up their IRA's and have moved a lot of individual stocks to ETF's, but a few stocks are troubling me.  My mom bought several "blue chip" stocks for their dividends and one is AT&T and the other is Disney.  She doesn't have a ton in disney, but it is down 5% from where she bought it. I could take the loss, only about $500.  More importantly though is that she has a huge amount of her overall account on AT&T and it is down 7% or about $7000.  Do I take this large loss or ride it out for a while.  She is 55. 

Thanks.

The $7,000 is gone, and if it's in an IRA there are no immediate tax consequences.  There is no point holding onto T hoping it will recover.  Sell both stocks and buy into something more diversified is my advice.  I would NOT want $100k in a single stock even if I had five million dollars.

zoltani

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Re: AT&T stock
« Reply #8 on: May 22, 2017, 04:46:54 PM »
The 7k is not gone until you sell.

By my calculation if she has 100k of T then she is generating about $4,780/year in dividends. At this point what is more important to her, income or appreciation? If she is truly down 7% including dividends then she bought at the peak of around $43, is that right?

I invest for income, and I am also down about 6% in T, and I am OK with that.
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smedleyb

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Re: AT&T stock
« Reply #9 on: May 22, 2017, 06:28:07 PM »
Two words:  peak Disney.

Sell it.