Who gives up their smart phone?
T has the fastest national network.
Dividend payout in the upper 50 %.
Phone system is a cash cow.
Cable cutting is going on but they are profitable. In my Wisconsin home Direct TV is the only gam in town.
Time warner is being hurt by pandemic, but will recover as pandemic passes.
Debt reduction ongoing as T has so many assets to monetize.
T's has a place in a dividend growth account, it is not a growth stock as it yields 7% and 6.75% at my average cost. All they need to do is keep on paying it. They've been doing it for over 27 years.
The fools opinion:
the increases it saw in 2019, the forward P/E ratio stands at around 9.7.
Also, while the current dividend exceeds net income, the company produced enough free cash flow in the previous quarter, $8.191 billion, to meet the quarterly dividend obligation of $3.726 billion. Moreover, over time, the payout ratio should come down. The previous annual dividend increase from $2.04 per share to $2.08 per share amounted to a 1.96% increase. Wall Street forecasts average yearly profit growth of 4.90%, pointing to an anticipated gradual reduction in the payout ratio over time. For these reasons, AT&T appears to have a safer payout than the dividend payout ratio would indicate.
Interestingly, the stock's consistent dividend increases may help make this dividend safer. Dividend aristocrats, stocks with annual dividend increase streaks of at least 25 years, tend to continue their payout hikes.
Of course, any company that ends annual payout hikes could face short-term, and possibly even long-term, selling. Former dividend aristocrat Bank of America suffered for years after payout cuts. General Electric continues to struggle since it cut its dividend. Given the stock's underperformance over the past two decades, management probably does not want to give investors an additional reason to sell AT&T stock. If the company can maintain its dividend streak, it more than likely will.
AT&T should benefit as more customers adopt 5G. The lack of competition should give AT&T, Verizon, and T-Mobile significant pricing power.
Furthermore, the company has contemplated selling DirecTV. While that would mean it loses DirecTV, it would enable AT&T to unload a money-losing unit and give the company some capital to pay down its debt.
Consider AT&T stockAT&T's dividend should remain safe. Given the potential of 5G and a high-yielding, growing dividend, AT&T stock may appeal to income-oriented investors at first glance. However, the decline of once-stable business units, as well as the cost of building out 5G, has hurt this company. During this time, the pressure of maintaining a dividend streak squeezed AT&T.
However, the beginning of 5G could give AT&T pricing power it has not seen in years. Additionally, if it sells assets such as DirecTV, it would have an opportunity to lower debt to more sustainable levels. |
