U.S. Markets closed

2 Dividend Stocks That Are Way More Productive Than AT&T Stock

Will Ashworth

AT&T (NYSE: T ) is currently yielding 6.7%. Dividend investors love AT&T stock and its juicy payout despite the fact it’s highly likely the telecom/media company will have to cut its dividend in the future to help pay down its massive debt.

at&t stock t stock

Source: Shutterstock

Debt is a big reason that I’m not a fan of AT&T and probably never will be. Chasing yield is a mug’s game. It’s the total return that counts, not dividend yield .

And while the AT&T stock price is up approximately $2.77 a share, 51 cents of that return is due to its quarterly dividend.

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

By the end of the year, the dividend could account for almost 100% of its total return. For my money, I want the dividend to account for no more than 50% of a stock’s total return, preferably even lower around 25%.

Here are two stocks with a market cap higher than $2 billion trading within $2 of AT&T that will meet my criterion above and outperform AT&T stock on a total return basis over the next 1, 3, and 5-year periods.

Both of these stocks should put AT&T on the bench. Permanently.

Wolverine World Wide

Michigan-based Wolverine World Wide (NYSE: WWW ) is probably best known for its Hush Puppies and Merrell brands. However, the footwear manufacturer has a total of 12 brands in its portfolio including Keds, Sperry, and Saucony.

Wolverine released its first-quarter results May 10 and investors didn’t like them sending its stock down by more than 5% on the news. With the losses after its Q1 2019 report, WWW stock is now down about 6.7% year to date. Its downward trend in 2019 ends three years of consecutive annual gains.

Like Warren Buffett, I believe that it’s good news when a stock is dropping in price because it allows you to buy while it’s on sale. Analysts see good things ahead for Wolverine.

“Despite back-end weighted guidance, we are confident Wolverine will achieve top- and bottom-line FY19 objectives,” wrote Susquehanna Financial Group analysts . “Headwinds faced in the first half should subside in the second half.”

Yielding 1.4%, capital appreciation is the key to shareholder happiness. Delivering an annualized total return of 13.2% over the past decade, I see WWW outperforming AT&T stock in the long run.

Park Hotels & Resorts

Park Hotels & Resorts (NYSE: PK ) was spun-off from Hilton Hotels (NYSE: HLT ) in January 2017. It is a real estate investment trust that owns 52 premium branded hotels and resorts in the U.S.

On May 6, in addition to releasing its Q1 2019 results, the company announced that it would buy Chesapeake Lodging Trust (NYSE: CHSP ) for $2.7 billion . The strategic investment gives Park Hotels a total of 66 properties in 17 states and Washington D.C. and an enterprise value of $12.0 billion.

As a result of the purchase, the company’s revenue per available room (RevPAR) increases by 3.4% to $182. It also expands the number of hotel brands in the portfolio beyond Hilton, DoubleTree, and Waldorf Astoria, to include Marriott (NYSE: MAR ), Hyatt (NYSE: H ), and other third-party operators.

Since Park Hotels was spun-off from Hilton, it’s delivered a 46% total return to shareholders through the company’s merger announcement with Chesapeake.

I expect that its latest acquisition will provide significant shareholder returns in the years to come. Currently yielding 6.0%, I believe it’s a much better and safer dividend play than AT&T stock.

At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.

More From InvestorPlace

Compare Brokers

The post 2 Dividend Stocks That Are Way More Productive Than AT&T Stock appeared first on InvestorPlace .