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Apple Vs. AT&T: For Dividend Investors, AT&T Comes Out On Top

Mar. 01, 2021 10:10 AM ETAAPL, T137 Comments
John Rhodes profile picture
John Rhodes


  • Apple is a good company with a low starting yield but a high dividend growth rate.
  • AT&T is also a good company but with a high starting yield and a low dividend growth rate.
  • For some investors Apple is the better investment but for other investors AT&T is the best investment.

The Set Up

Apple (AAPL) and AT&T (T) both pay dividends. However, AAPL has been the right pick for one type of investor and T is the right pick for another type of investor. I'll be a bit extreme in what I say so I can make my points. However, I understand that many investors walk a middle path. I'll cover this in the end.

Here's how the article plays out. First, I will quickly talk about AAPL and T. It won't take long because there's no need to dive into piles and piles of data. Second, I'll provide charts that show why AAPL is far superior to T. Further, I'll explain why AAPL has been the right choice for some investors. Third, I'll provide some charts that show why T is superior to AAPL. It's a bit shocking, but for some investors, the evidence is clear. T is undoubtedly the most rational investment by a large margin. Lastly, I'll provide a middle path that will likely make everyone happy.

AAPL Is Best For Growth Investors

While it's true that AAPL pays a growing dividend, you're not going to get rich from that cash stream unless you own a large pile of shares. So, we must instead look at something different.

AAPL's dividend and dividend growth are far less important than AAPL's capital appreciation. If you want to "make money" with AAPL, the idea is that you buy and hold because the price of the stock goes up. The best reason for the stock to go up is because it's growing. It's generating more and more cash over the years and shareholders are partners, participating in the growth. Rewards are handed out by way of dividends but also by waiting for someone else to buy your shares at a higher price in the future.

This article was written by

John Rhodes profile picture
I am an investor, entrepreneur, father, husband, coach and teacher.

Analyst’s Disclosure: I am/we are long AAPL, T. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (137)

slodon28 profile picture
Long AAPL and T
ATT has the number one movie in America again. "Tom and Jerry" is a smash hit. (just like Wonder Woman and the Aqua movie) Warner Media certainly is a great unit. Totally undervalued by the rubes on the Street. T is the buy of a lifetime. What a sale!
Nice write up John. I own both of these stocks and will for some time to come.
If you own APPL and want immediate income, you can sell covered calls to create your own "dividend". Apple's price today is around $126. You can sell the April 130 call option for $4.00. The call option premium will give you a return of 3.2% in 45 days (25% annualized). Even if the price of APPL goes to $130 and is called away, you'll earn $8 per share. The biggest downside to this strategy is if the price of APPL jumps well above $130, you will lose potential capital gains. You also need to look at your tax situation and risk tolerance before using this strategy.
daytonturner profile picture
The value of this article is not so much in comparing Apple and T as it is in comparing a high dividend low growth stock to a low dividend high growth stock. One's preference is likely dependent upon one's age. If I were in my 30s, I would go with the growth stock, but if in my 80s, I want my money and I want it now. If someplace in the middle, I would own some of both.
P373R profile picture
"So, the chart directly above comparing AAPL's price with T's price makes it clear that if you're interested in growth, AAPL is far superior."

AAPL HAS BEEN far superior. Considering its valuation and EPS growth going forward I'm not sure if it will be such a clear winner in the future as well (it's only been 2 months but AAPL is -4% YTD and T is -1% YTD on total return basis). It just might but the main driver of that may as well T's mgmt total incompetence..
John Rhodes profile picture

Eventually, balance sheets, cash flows, earnings, R&D, and the fundamentals... matter.

That’s not a comment about one stock being better or worse, in this article. It’s just something that ends up being true for any stock.

Thanks for looking at that data.
@John Rhodes

AAPL is clearly better than T, however those aren't the only two stocks available.
John Rhodes profile picture

If it was absolutely better then ALL money would go to AAPL versus T. However, many people hold both. Why? If it’s *absolutely* and always better, there should be zero investment in T. Nothing.

So, something else is going on. Investors do choose to invest in T. Or, both stocks.

Thanks for commenting.
Eileen Dover profile picture
AT&T just raised their prices AGAIN by $10/month for AT&T Now and their horrible service.
They really want people to drop it and I will give them just what they want.
Goodbye forever. I will take as many customers away as possible.
You got it! And very nicely written. You just outlined the choice a retiree must make when s/he has juuuust enough savings to make a go of retirement. I got layed off in my 60's from age discrimination. How do I know? Because a month after the layoff they were hiring newbies at half my salary! That's ok, companies can do what they want, and it was my responsibility to stay relevant to the company and the market. But get ready for it folks - ageism is alive and well in the USA

But I digress. I was an AAPL investor for a long time, growth investor - did well. I could let the stocks sit there and grow over the years because I wasn't withdrawing anything. The growth came unpredictably, but so what? Waiting was easy. Now, however, absent a salary, what to do? How do you pay bills in retirement when you have juuust enough? Rates are too low for what I'm working with to make a living on fixed income. Selling shares in growth stocks month after month, year after year, to pay bills? Which stocks do I sell? Round robin? Sell the losers and keep the winners? Vice versa? Try it! Then tell me how you do it month after month, year after year and sleep well at night. ETF's? Mutual funds? Ew. Fees and Frontrunning and panicky Fellow Investors creating tax problems ... among other FundFailures.

Dividends, however, are predictable - quarter after quarter, if you pick the right companies that raise the payout, paying the bills from portfolio income can be done. Even during the grim ups and downs of the pandemic, those dividends were like Old Man River: they just kept rolling in. SWAN. Got some bargains during the big downturn last spring as well - stout fellow. T was one of them. AAPL? I've got bills to pay this month - what will another investor/speculator pay for my shares?? (... and T better start raising the payout next year or they will get my axe...)
User 47429802 profile picture

"Dividends, however, are predictable - quarter after quarter, if you pick the right companies that raise the payout, paying the bills from portfolio income can be done."

"Selling shares in growth stocks month after month, year after year, to pay bills? Which stocks do I sell? Round robin? Sell the losers and keep the winners? Vice versa?"

"...if you pick the right companies..."

"Which stocks do I sell?"

Can't make this stuff up...
Ptstanford profile picture
I don't know that comparing APPL and T is fair. However, I own both for the reasons stated by the author... i.e. APPL for growth primarily and T for income. T does pay the far superior Div and is undervalued and APPL has the superior growth and is way overvalued. Since both are giants in their sectors and will likely be viable for a long, long time, I simply plan to hold them and accrue the values and dividends. Anyone planning to sell APPL after the massive run up, might think twice. It could well simply meander sideways for a couple of years as the PE erodes back to something reasonable via earnings increases. There's no guarantee it will sell off precipitously, so selling now could well be a mistake. Note that during the Covid debacle, instead of falling off a cliff, APPL went from $64 to $129. I think these two stocks are buy and hold.
John Rhodes profile picture

In general, buy and hold is a winning strategy... and, the benefit is never being wrong about when you should sell.

Have a great day.
I would like to see this revisited when AAPL increases the dividend by more than expected which has been the rumor to happen soon. I like both aspect and while my IRA portfolio was 40% AAPL until shortly after the last stock split I have since add some T and other beaten down dividend contenders over the past 12 months. I filtered around 10-20% of each swing trade during the recovery into $T and others REITS and long term stocks and while I do see the benefit of $T I could only trim $AAPL down to 20% as I still see them making serious growth over the next few years.
I had a concentrated AAPL portfolio from 2010 to 2020. It really grew during that time. I sold it all in April 2020. In past times, Apple would hit all their numbers but maybe miss by a hair in one category and the stock would tumble down the stairs. So I figured Covid would surely cause it to drop or just tread water. Obviously in hindsight I was very wrong. I now have a concentrated T portfolio and financially independent at 46 on the dividends. I do think AT&T can move to $40 or $50 more easily than Apple to $200.
More likely, AAPL will continue to steadily go up while T continues its steady decline
Long long term holder of lots of T and Apple.
Love Apple and became wealthy as a result.
Don't talk to T much and living separate lives.
Too tired to file for divorce.
Making a AAPL and T comparison of any kind is like comparing living in Oakland CA or Beverly Hills CA!
This discussion is interesting mostly because hindsight is 20/20. AAPL is a behemoth these days as T is a high yield stagnant telecom. How could anyone have ever predicted:
1. That in 1997 the company was so broke that Bill Gates literally GAVE them $150M to keep them alive and avoid antitrust...only to become a $2T company selling phones
2. That a $50 music ipod with licensing issues would become a phone
3. That people would pay over $1000 for a phone and view it as a life and death instrument which literally IS the entire life of millions of owners.
Not me!
With all that, as a retiree, I'll take my 7% yield.
...oh, and I'll stick with my year old $100 android phone as it does way more than I need....and more than most Apple owners need too!
John Rhodes profile picture

Thanks for this.

Hindsight is 20/20.
jbfiacco profile picture
@gpomich yes, and your “yield”will go up as the share price goes down. For the future of T shareholders, look at GE.
Dumped all my T a few years ago. Kept adding to my AAPL over the past few years. Happy with the result. And looking at the total returns of each of the past few years, it's clear I made a good choice.
@schris1960 Yup... you did!
User 47429802 profile picture

I have NO idea why you would turn down a 22% loss in share price and a 7% yield, without the four penny increase this year, for a company that is one of the most successful in history. You must be on drugs.

Oh, wait! I know. You have a time machine and you went back and made that switch! Because, you know, the prior 18 years of underperformance just wasn't enough to convince you that one company was vastly better than the other, even though it didn't have a 7% yield.
@User 47429802 Yeah, it's great to have a time machine. In my time machine, I get the Wall Street Journal every morning, dated one year into the future. You would be surprised at all the smart investment decisions that I make.
Buyandhold 2012 profile picture
The 5 year dividend growth rate of AT&T is 2.10%.

The 5 year dividend growth rate of Apple is 10.40%.

With that information, it is possible to calculate in how many years a $100,000 investment in Apple will have paid more dividends than a $100,000 investment in AT&T.

Figure out how many years it will take to receive more dividends from Apple than from AT&T.

Then ask yourself: Are you willing to wait that long?

Or will you live that long?

In this case, I am in favor of hedging my bet and owning both stocks at the right price.
User 47429802 profile picture
@Buyandhold 2012

"The 5 year dividend growth rate of AT&T is 2.10%."

The dividend growth rate has declined for every year of those five years and currently sits at 0%.
John Rhodes profile picture
@User 47429802

I’m curious to see what happens this year. They have time to keep the streak alive. But, the fuse is burning.

Thanks for commenting.
User 47429802 profile picture
@John Rhodes

John, they could do the one penny raise at the last moment, the last quarter possible. But, what would that tell you? Wouldn't it become even more obvious it is a game to keep a streak alive, and not really an economic, business decision? To me, that's even worse.
18 Wheeler Truck Vs Yugo car in 50 Meter drag race.

Yugo won. Yeyeeeeee
Why compare apples and oranges (pun intended)
nealyohara profile picture
I post gains with AAPL. I remain underwater with T, despite the lofty dividends. When markets rise, T tends to float or sink. I may soon tolerate the loss and sell T, then more quickly turn red to black by riding AAPL.
User 47429802 profile picture

You should only do this if you like money.
@User 47429802 Exactly!! Once again I agree with you!
nealyohara profile picture
@User 47429802 Thanks for the encouragement.
For those of you who find T "uninvestable", do you feel that way about other low PE/high yield companies in other industries like consumer staples, banks, insurance, etc.? If so, are you saying sell them all to ZERO? T price has been basically 30/share for 30 years. Every few years it jumps over 40 but it sits in the same range and continues to yield well for decades. It's what happens when a monopoly is forced to break up and compete on price and costs (spectrum most recently). AAPL, AMZN, GOOG may be in the same boat eventually and it won't seem like a lifetime of growth at that point. Fyi, TSLA has rocketed higher and they'll never even enjoy monopoly status.

I'm not debating the lunacy of the T's DTV decisions but there's a reason no/low growth (and high yield) makes sense for someone just as there is for somebody else to buy 0% treasuries. I don't know why they sell but billions are bought every day.

I think monopoly breakup excuse is not justifiable. T has a history of making bad business decisions. Remember Universal credit card?

There are many network related business that they could have dominated, for example co-location, they had good presence in that business too, why did they get out?

Direct TV, CNN and HBO max, what do old boy network, regulated business executives know about running these assorted businesses?
How can the breakup not have had negative effects? Without it, do you think we'd be getting unlimited cell service for rates lower than ever? Do you think the spectrum auctions would be generating significant costs? Do you think they'd be desperate enough to buy DTV to attempt to grow? It's water under the bridge but T would control telecom without the breakup. Imagine if AAPL had no choice but to have 90+% of their phones on T network. Heck, T might own AAPL!
AAPL just today made more than T will make you in a decade of Totale returns
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