Visit the morningstar.com site to look up AT&T (T) andVerizon (VZ) information. In the 'Dividends' page for AT&T,search for the most recent quarterly dividend based on the'ex-dividend' date. You will see that it is $0.52. Since companiespay dividends quarterly, it means AT&T has declared it will paya total of $2.08 in dividends over the next year (or fourquarters). In the 'Dividends' page for AT&T, you can see thatthe company paid a dividend of $1.76 in 2012 and $1.96 in 2017.

That implies a dividend growth of about 2.18% over these fiveyears calculated as: (1.96/1.76)^(1/5) - 1. The caret '^' denotes'raised to the power of' in the mathematical expression. Currently,AT&T stock is trading in the range of $26 to $39 per share.Using the current price for AT&T you see on morningstar, theexpected dividend of $2.08, and assuming that the company canmaintain the dividend growth of 2.18% per year indefinitely, usethe Constant Dividend Growth formula to calculate what the impliedrate (discount rate or required rate of return) is for AT&Tbased on the current stock price. Do the same exercise for Verizon.Which stock has the higher implied discount rate? Does that makesense to you? Which stock appears to be cheaper and why?