Dividends Under $25: Don’t Miss This 4.5% High-Yield Stock

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If you’re comfortable with bottom-fishing (or even catching falling knives) to get a high-yielding dividend stock alongside outsized turnaround potential, there are plenty of names that have fallen well below the $20 per-share mark to consider nibbling away at in the fourth quarter. Of course, strategic turnarounds and pivots don’t always go as planned.

And for investors lacking patience, bottom fishing for higher-yielders might turn into a money-losing proposition, especially if we’re talking about the same management team that’s stuck around during a given stock’s descent. Either way, investors should be looking for catalysts and pay close attention to the financials, especially the balance sheet, to ensure the security of a dividend, especially if we’re talking about yields that are north of 6%.

In this piece, we’ll check out a hard-hit telecom firm with a dividend yield that’s starting to return above the 4.5% level again. Indeed, when the yield goes up as the share price falls, the risk feels like it’s increasing, but it’s actually decreasing, especially if a turnaround plan is still going according to plan.

Of course, such turnarounds are expected to see bumps along the way. And the odd quarterly fumble might not be taken all too well by investors, but, either way, I think a name like AT&T (NYSE:T) is worth giving another look as it comes in again, granting income investors a second chance to buy at below $25 per share and perhaps the 5% yield might also be in the cards as selling pressure mounts into year’s end.

AT&T’s latest 17% plunge looks overdone

In case you missed it, shares of long-time telecom firm and recent comeback play AT&T have been experiencing a rolling over, so to speak, alongside several other notable plays in the telecom scene. Indeed, just like when it seemed like AT&T’s fortunes had turned for good, the shares cratered by close to 17% from 52-week highs. I think the plunge is a tad excessive and may be worth braving for investors who still believe in the company’s transformation. Of course, the latest quarterly result may have seen profitability numbers being weighed down by intense competition.

Really nothing shocking, at least in my humble opinion. Despite the less-than-ideal report, AT&T’s top boss, CEO John Stankey, still feels “really confident” in his firm and its trajectory. I think investors should take the man’s word for it, especially as AT&T is still operating at a higher level today than when it was in the abyss, going for $14 per share back in the middle of 2023.

Indeed, the telecom has come such a long way since then, and while the shares have since gone on to gain 75%, I think there’s still plenty of value and dividend growth to be had as the firm moves past a tough report, which I don’t believe is indicative of the beginning of the end of the stock’s turnaround. The company is still poised to spend a great deal (around $22 billion this year) while integrating its latest acquisition.

Don’t let one quarterly fumble scare you from the shares

Though such an expansion and digesting of its recent spectrum purchase could make margins bumpier over the near term, I’d not jump to conclusions just yet, especially as AT&T looks to improve its value (quality network for the price) to become more competitive with the share-takers in wireless. Yes, hefty investments and aggressive promos are going to cut into margins, but if the firm can take share, I do think the winds will move to its tail again as it looks to regain its competitive edge.

Longer term, demand for connectivity (think low-latency, high-bandwidth wireless) is a boon that I think could be the rising tide that lifts most boats in the wireless scene. For now, investors should put their faith in AT&T’s “big bets” as they collect the now very well-covered dividend.

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