AT&T is the Ultimate Dividend Stock Right Now

A deep-dive into the fundamentals behind AT&T stock

facebook twitter linkedin


AT&T Inc. (NYSE:T) is a U.S.-based telecommunications conglomerate with operations in multiple countries. The company has over a century of history. It's also the parent company of other major corporations including WarnerMedia and DirecTV. At the beginning of 2020, T stock traded near its 52-week high of $39.70, but T stock is currently down about 30% year-to-date. T stock remains near its 52-week low of $26.08 since its decline in March. AT&T is slated to deliver earnings before-the-open on Thursday, October 22 and the company will be looking to push T stock back up to its pre-pandemic highs.

AT&T has a market cap of $197.72 billion and a book value of $24.69 per share. Its price-to-book (PB) ratio stands at 1.15. The company has a trailing price-earning (P/E) ratio of 17.27, and a forward P/E ratio of 8.86. The company's trailing 12-month P/E ratio is 16.92.

AT&T has beat expectations in three of its last four earnings reports.  In the most recent quarter, AT&T beat expectations by $0.04. The company reported an earnings per share (EPS) of $0.83, just beating out the expected $0.79. On October 22, AT&T is expected to report an EPS of $0.76. continuing the downward earnings spiral the company has been experiencing recently. If AT&T reports the expected EPS of $0.76 for the third quarter, it would represent an $0.18 decrease year-over-year, as AT&T reported an EPS of $0.94 in the third quarter of 2019. In the first quarter of 2020, AT&T missed earning by just $0.01. The company has a trailing 12-month EPS of $1.64.

AT&T grew its revenue more than $10 billion between 2017 and 2019. In 2020, AT&T has experienced a decrease in revenue. First quarter earnings alone decreased by $4 billion, and another $2 billion in the second quarter of this year. The company’s net income growth has been largely inconsistent over last 4 years. Nonetheless, AT&T has maintained their annual net income above the $10 billion on a reasonably consistent bases. In 2017 and 2018, the company produced net income of $29.45 billion and $19.37 billion, respectively.

AT&T currently has $17 billion in cash and $196.22 billion in total debt. The company’s balance sheet holds $547.9 billion in total assets and $354.45 billion in total liabilities. AT&T's total equity stands at $1.54 billion. The company has paid its investors dividends consistently since 1984, and have consistently grown their dividend since 1999. AT&T last paid a dividend of $0.52 per share. The $2.08 annual dividend AT&T pays comes in at a dividend yield of 7.39%.

At this point, AT&T doesn’t have much room to grow revenue-wise, but it does have room to increase its stock price. T stock currently trades at a price that is only $3.06 lower than its book value. The recent dip will be a huge opportunity for dividend investors to pick up the stock at a discounted price.

Furthermore, as one would have been expect from a massive and consolidated company like AT&T, the company has maintained its high-yield dividend during the ongoing worldwide pandemic. The company could continue raising its dividend for years to come, too. T stock has an opportunity to see decent price appreciation as the stock slowly climbs back to a more justifiable valuation. Overall, it's natural to feel that AT&T seems to be too big to fail. The biggest potential risk for investors will that AT&T gets broken up due to monopoly-like practices. Aside from that, AT&T is a clear winner for dividend investors.

 

Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 

 


 


 
Special Offers from Schaeffer's Trading Partners