How Dividends Change the Game for This Dow Stock

The wealth-building power of compound interest will never cease to amaze me.

It's a story of patience and attention to detail, where small differences in short time scales add up to massive divergence over decades. And in the end, the biggest winners don't always deliver the fattest share price returns.

Let's take a look at telecom giant AT&T (NYS: T) as an example. Ma Bell rarely offers the incredible double-digit dividend yields you often see from smaller communications stocks, but there's something to be said for consistency:

T Dividend data by YCharts.

At times, the yield has dipped below 2% -- hardly the stuff income-investing dreams are made of. But the actual payouts show a steady rise over two decades, and that changes everything for AT&T's shareholders:

T Total Return Price Chart
T Total Return Price Chart

T Total Return Price data by YCharts.

This is what unruffled consistency can do for you. AT&T has been a component of the Dow Jones Industrial Average (INDEX: ^DJI) since 1939, and it has paid uninterrupted dividends since 1893. Recessions and world wars can't stop this money train. That's the kind of stubborn consistency you'd expect from a decades-long Dow member.

That's what AT&T is all about. Sure, you could buy MetroPCS (NYS: PCS) or Leap Wireless (NAS: LEAP) and hope for a buyout or some other catalyst to drive the share price. Or you might have picked up some Telefonica (NYS: TEF) when the Spanish telecom's yield hovered in the double digits. But price gains are anything but guaranteed, and this is what happened to Telefonica's yield when the company needed to save some cash:

TEF Dividend Yield data by YCharts.

I'd take AT&T's smooth and solid payouts over those scary options anytime. If you're interested in high-quality dividends on your quest for high-yielding stocks, The Motley Fool has compiled a special free report outlining the nine most dependable dividend-paying stocks -- including Ma Bell. It's called "Secure Your Future With 9 Rock-Solid Dividend Stocks." You can access your complimentary copy today at no cost. Just click here to discover the winners we've picked.

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Fool contributor Anders Bylund has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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