Dear Mr. Berko: In May, Congress stopped the National Security Agency from collecting and storing our personal and business calls on their servers. Our broker says the National Security Agency will require American Telephone to maintain all this information on its own equipment at a huge cost — hundreds of millions yearly.
We don’t care if the government knows what we talk about because we have nothing to hide. But our concern is what this extra cost will do the earnings and dividends of AT&T. This frightens us, as it does two of our friends who also own AT&T on your recommendations You told us to buy this stock about four years ago at $28 because you said it had a safe 6.2 percent dividend. We invested $35,000 to buy 1,250 shares, which is 18 percent of our portfolio.
We’re not gamblers and can’t afford to lose money.
Our broker is convinced the archiving will increase AT&T’s cost of business, reduce the dividend and cause the stock to fall in value. He said there could be billions of dollars in legal bills, too. This is very unnerving to us. He wants us to put the money in an annuity that is guaranteed to pay us 7.1 percent for as long as we live.
We, and our friends, need your advice immediately. Please call us or write us or email us and tell us if we are doing the right thing.
How could you have done this to us? My husband is very nervous, and we think we’d be better off with an annuity from Jackson National Life Insurance.
— BR, Phoenix
Dear BR: This broker might be the same grifter who was advising people to sell McDonald’s shares in 2014 because McDonald’s was supposedly using a product called “pink slime” in their meat. This dirty rat is as smooth as licorice. He goes off half-crocked with partial truths, and from the comments I received last year, I think he sold a lot of annuities in 2014. It’s so difficult to find an adviser to trust.
Relax, calm down and dial your family doctor for a Xanax or Lorazepam, two of my favorite prescriptions. Failing that, I suggest you buy some sipping whiskey, though I suspect you’re a teetotaler. You and other AT&T (T-$35.60) shareholders are crying yourselves hoarse in the face over something that will have as much impact on your daily life as a few extra photons in your breadbox. This change won’t cost AT&T a centime, and a personal contact at AT&T told me that NASA will probably pay AT&T to store this data. So there!
In the past few months, at least a dozen readers have expressed the similar concerns about American Telephone & Telegraph, which has been one of my stalwart income-growth favorites for decades and has increased its dividend for 31 consecutive years.
In an article titled “AT&T Has a Significant Growth Opportunity Ahead,” author Brian Nichols clearly tells us how AT&T is increasing its coverage universe and suggests that: “No company has prepared itself better over the last year than AT&T, which has sets itself up for significant growth in the years ahead.” And: “The bottom line is that AT&T has a big growth opportunity ahead, and long-term investors should feel very good about the company’s prospects.”
AT&T has spent the past few years making huge investments to grow its spectrum. Today, AT&T has an impressive network in place that can easily handle enormous increases in data. AT&T will benefit from this bullish macro trend, and in the coming few years, its share price should reflect this improved growth opportunity.
Credit Suisse, Argus, Standard & Poor’s, Market Edge, UBS, JPMorgan Chase & Co., Barclays and Goldman Sachs have similar bullish opinions on the stock. And I suspect that these reports may be available to that dirty rat broker if he’s honest enough to show them to you. However, in the past six months, insiders increased their personal holdings by 5.6 percent, and that’s certainly a bullish indication.
