AT&T (NYSE: T) has had a rough couple of years. The company had to cut its dividend payouts in 2022 due to some underperforming assets, and its share prices are currently down by 37% from their 2019 high. Yet high-profile hedge funds are buying the dip. Should you follow their lead? What’s going on with AT&T?
A Closer Look
Founded in 1885, AT&T was the primary telephone service provider in the United States until the 1982 breakup of its monopoly. It remained a powerhouse in telecommunications, though, eventually expanding into cable TV and internet, cell service, and more. However, not all of its expanded ventures were successful in the long run.
The company has recently faced a lot of headwinds due to changing consumer preferences. Its first-quarter non-fiber optic broadband subscribers have declined by more than 31% in the past two years. Likewise, first-quarter business wireline revenues are down by 14% over the same period. Consumers aren’t as motivated to trade in their cell phones for the latest upgrades, and new media ventures such as U-verse streaming TV never captured as many customers as expected.
Zooming Out
AT&T is going through some growing pains right now. But it’s far from down and out. The company is still paying a healthy 5.9% dividend yield, and there is reason to believe that this will increase soon. Just 37% of the company’s $21.9 billion free cash flow went to dividend payouts last year, leaving plenty of room for an upward adjustment. In addition, the company’s fortunes may be turning around. AT&T has invested heavily in building a nationwide 5G network, one of only three companies to do so. It’s also launched fixed-wireless broadband services, allowing customers who don’t have fiber optic internet available to boost their connection speeds.
AT&T is a venerable telecommunications company with a storied history. Despite some recent issues, the company continues to meet the moment. If you’re looking for a buy low opportunity on a largely stable dividend stock, this is definitely one to consider.
Lisa Fritscher does not have positions in this company. Stocks.News does have positions in this company.
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Contributing Writer
Lisa Fritscher has been a contributing writer for App.Stock.News since 2024. Lisa has been interested in investing since winning The Stock Market Game in high school. In more than a decade as a professional writer, she has written consumer-facing financial information and advice articles for a wide variety of publications. She has a Bachelor of Arts in Psychology from the University of South Flori...