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Investing Specialists

More Dialing for Dividends at American Funds

Can you hear me now?

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The American funds have a penchant for dividends. Some funds, such as  American Funds Washington Mutual Investors (AWSHX), are more focused on dividends and deriving income from stocks than others, but, on the whole, American's managers, or counselors (as the firm calls them), like stocks that pay investors some income.

Recently, two of American's large dividend-paying holdings,  AT&T (T) and  Verizon Communications  (VZ), announced earnings for the first quarter of 2009. In this issue, we'll review the announcements and what they mean for American's positions in the stocks.

First, AT&T's earnings per share fell to $0.53 from $0.57 from the first quarter of 2008, a decline of 7%. Total revenues fell slightly to $30.6 billion from $30.7 billion, including an increase in revenue from data (Internet service) to $6.3 billion from $6 billion and an increase from wireless to $11.6 billion from $10.6 billion. Overall, the slowing economy doesn't seem to have hurt the firm's sales very much. The push to bring data and video into homes and the popularity of  Apple's (AAPL) iPhone, which uses AT&T wireless service, are also clearly helping the firm. Indeed, the firm reported more than 1.6 million Apple iPhone 3G activations. Additionally, overall users of 3G wireless devices increased to 41% from 20%.

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John Coumarianos does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.