Thanks to iPhone mania and a hefty yield, AT&T is just the kind of stock investors want in this environment, Cramer said.
This once-boring Ma Bell has seen a steady surge in revenue ever since Apple’s ultra-slick handheld hit the market. AT&T is the envy of the cell-phone world because it’s the sole carrier for the iPhone. And that has had a halo effect on store traffic and the sale of other devices, said Chief Financial Officer Rick Lindner, who called in to chat with Cramer for tonight’s show.
The $200 price cut only created more demand too. When comparing the two weeks prior to the decrease with the two weeks after, there was a “dramatic increase” in sales, Lindner said. AT&T customers are upgrading to the iPhone, and customers from other clients are switching over.
“The whole country now is divided between teenagers who are on [AT&T’s network] or on Verizon’s,” Cramer said to Lindner. “And if you won that war, you’d have the next generation just lock, stock and barrel.”
According to Cramer, high growth during times of low inflation makes future earnings much more valuable. Lindner said AT&T is enjoying great performance across all segments, especially wireless. In fact, wireless data revenues grew at more than 60% last quarter. Broadband demand is also up, and the telecom’s IPTV service is taking off, Lindner said.
AT&T also offers a nice 3.6% yield, which has increased every year for the past 22 years. The CFO said his company’s credit and balance sheet financials are “real strong,” so the credit crunch didn’t affect AT&T as much as it did others. But as rates come down, “our dividend yields start to become very attractive to investors." Cramer agreed: Rate cuts make high dividend yields better income producers than cash or bonds.
The bottom line: The one stock every investor should have in their retirement portfolio is AT&T, Cramer said.
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