Stock Picks – July 23, 2018

Stock Pick # 1

Today I purchased shares of telecom giant AT&T (T 33.93 -0.19 -0.56%). AT&T is currently paying a 6% dividend and has been continuously paying and growing this dividend for the last 34 years! Once its merger of Time Warner is finally complete, AT&T will be the 5th largest company in the United States. AT&T reports on their 2nd quarter earnings tomorrow and it will be the first quarter that will include financial information for Time Warner. With the purchase of Time Warner, AT&T is setting themselves up as a content creator. In many ways it seems like AT&T is becoming more like media giant Disney (DIS 116.24 -0.70 -0.60%), instead of simply a telecom giant.

I believe that the market will be pleasantly surprised with their earning report tomorrow and we will see a large jump in their stock price. I purchased shares for $31.07. However, I am also hedging my bets as I have another order in at $28.09 as one area of concern to me is the amount of debt that AT&T has, however I do not believe they are over leveraged at this time. But Mr. Market may decide tomorrow that they are over leveraged and will cause a large price reduction. Should that happen, I’ll buy some more on sale.

Stock Pick # 2

In my IRA I purchased shares of Main Street Capital (MAIN 37.68 -0.28 -0.74%). Main Street is a business development companies (“BDC”) who makes loans to small and lower mid market businesses in exchange for an equity position in their company. They have investments in a wide variety of businesses and have had good returns from their investments. They pay nearly a 6% dividend, but rather than paying it 4 quarterly installments as most companies do, they pay it in monthly installments! I paid $39.35 a share.