Better Dividend Stock: AT&T or IBM

AT&T (NYSE: T) and IBM (NYSE: IBM) were once both popular dividend stocks. Both blue chip companies paid out high yields, had sustainable payout ratios, and raised their dividends every year.

However, AT&T and IBM have both underperformed the S&P 500 over the past five years. After factoring in reinvested dividends, AT&T generated a negative total return of 10%, while IBM generated a positive total return of just 10%. The S&P 500 delivered a total return of nearly 130% during that period.

Let's see why AT&T and IBM have been such disappointing investments, why the two companies face similar challenges, and if either laggard will become a decent dividend stock again in the future.

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Source Fool.com