Dear Mr. Berko: I’m a 41-year-old happily married woman with two boys. Before my dad passed away in late 2008, he invested $60,000 and bought 2,300 shares of AT&T at $26 a share for me. He told me to keep it for the rest of my life and said it would be the icing on my retirement cake if I reinvested all the dividends each quarter. That was over 10 years ago, and the Dow Jones Industrial Average has increased from about 10,000 to over 25,000 since then. But my AT&T investment has only doubled in value, and I am automatically reinvesting the dividends. My original 2,300 shares of AT&T have grown to 4,000 shares, worth about $120,000. Two stockbrokers my husband and I have talked to want us to sell all of the shares because AT&T is a “slow-to-no-growth stock” with little future to help us in retirement. Frankly, AT&T’s share price is hardly higher today than it was when Dad bought it for me.
One of the brokers, from church, wants us to put this money in six growth mutual funds (list enclosed) that have earned an average of 11 percent a year since 2008. The other broker wants us to buy two annuities. One would be a bond annuity and be very safe with little risks, while the other would be a growth annuity with good potential for long-term growth but with risks. Please advise us on what to do.
— HG, Moline, Ill.
Dear HG: The first thing you should do is visit the amen corner of your church and say a special prayer for your dad. Tell him I said “hello.” Then say something nasty and impolite to those two brokers. Then do nothing.
AT&T (T-$30.85) doesn’t leave contrails in the sky. It’s not a high-powered, showy growth company, and its research and development, though impressive, lacks the glitter and hype of other telecommunications companies that scream, “Buy me!” Nonetheless, T is a strong, steady telecom that owns AT&T Wireless, BellSouth, DirecTV and Time Warner. Its list of media properties is considered the eighth wonder of the world. And the expected impressive growth of advertising revenues that wise observers believe is headed AT&T’s way will contribute to the near certainty that AT&T will experience a continuing stream of higher revenues, increasing earnings and annually growing dividends.
