AT&T Yielding 6%+

[flintnational]

T is down 4% today. It's current dividend yield is over 6%. We have never really been invested in intermediate or long term bonds. (You can tell where this thread is going, right?) We have tended to use real estate for diversification. We have sold the RE, and are now sitting on 20% of our investable assets in Vanguard short term bond index, 10% is in an owner financed RE note (bond like) and 70% is in stock.

Two questions, what do you think of T as an investment? What do you think of T's yield as a replacement for a part of our short term bond index ? Our retirement is likely over funded and includes pensions and SS that will reduce our WR below 1%.

While I generally don't buy individual stocks, we bought Exxon when it dropped to $68 a few years ago. I bought it for the same reasons listed above, basically for a bond replacement with a 4% yield. Time to do it again with T?

[Dash man]

T has been heading in a downward trend for a while, mostly because of its debt load and uncertainty about the value of its acquisition of TWX. I’m well in the red now, but still get a great dividend. My plan is in December to sell it as a tax loss against some gains I have. I may buy it back after 30 days, but haven’t decided yet.
It’s a gamble to buy it now. But it does have decent cash flow.

[flintnational]

^^ It would be a yield play. So as long as they do not cut the dividend or go out of business, I would be okay with the 6% DY.

Edit to add: And the creek don't rise.

[Luck_Club]

I'm heavy in T, and XOM.
T+
They have been sliding for about a year, but the fundamentals all look positive. they pay about $2 a share, and have a diluted earnings of about $5 a share. So they have about 40% payout back to share holders. My philosophy on investing is show me the money!

The only thing that does scare me a bit is unlike exxon, they have a negative equity when you back out goodwill and other intangibles.

[Blueskies123]

Have you looked how much debt they have? What happens when interest rates go up and the their debt matures. You should look at when their debt needs to be rolled over and what interest rate they are paying. You can model the hit to the bottom line if interest rates go up 100 basis points or more.
How is their unfunded pension liabilities?
Let us know what you find out.

[aja8888]

Quote:

Originally Posted by Blueskies123 Have you looked how much debt they have? What happens when interest rates go up and the their debt matures. You should look at when their debt needs to be rolled over and what interest rate they are paying. You can model the hit to the bottom line if interest rates go up 100 basis points or more. How is their unfunded pension liabilities? Let us know what you find out.

AT&T's pension liabilities are roughly 75% funded at the end of 2017. Can't find newer data. That's pretty much industry norm these days.

[flintnational]

Quote:

Originally Posted by Blueskies123 Have you looked how much debt they have? What happens when interest rates go up and the their debt matures. You should look at when their debt needs to be rolled over and what interest rate they are paying. You can model the hit to the bottom line if interest rates go up 100 basis points or more. How is their unfunded pension liabilities? Let us know what you find out.

The debt is high but IMO, well covered by earnings. I don't know about the pension situation but a good point with any of these large historical companies. I will check on it. It has not come up as an issue in any of articles I have seen on T.

Edit to add: Looks like pensions are funded to 76%. Pretty standard. But a good point. Its one of the reasons I have not been tempted by GE.

[The Technician]

From a technical perspective, I would absolutely not invest in AT&T. If you own it, I would seriously consider selling it and using that money to invest in a stock that is displaying strength, not weakness.

AT&T hit a new 52-week low today and is in a long-term downtrend.

[flintnational]

Quote:

Originally Posted by The Technician From a technical perspective, I would absolutely not invest in AT&T. If you own it, I would seriously consider selling it and using that money to invest in a stock that is displaying strength, not weakness. AT&T hit a new 52-week low today and is in a long-term downtrend.

Thanks for posting. You might want to introduce yourself at the "Hi, I am" thread.

[bobandsherry]

Quote:

Originally Posted by Luck_Club I'm heavy in T, and XOM. T+ They have been sliding for about a year, but the fundamentals all look positive. they pay about $2 a share, and have a diluted earnings of about $5 a share. So they have about 40% payout back to share holders. My philosophy on investing is show me the money! The only thing that does scare me a bit is unlike exxon, they have a negative equity when you back out goodwill and other intangibles.

Interesting to find similarities to what you wrote to what many said about GE before they tanked.

[nash031]

I bought 675 shares of T on a limit order at 30.50 today. I think T is at least 25% undervalued right now, and it’s historical dividend payout is not a bad thing in a market like this. It’s not going to be a terrific growth stock, but as a value investment, I think it’s about as strong as anything out there right now. In fact, as someone looking at buying, I love the long term downward trend the technician pointed out, personally. T has taken advantage of it lately as well, buying back their own shares at an increasing rate over the last few quarters.

T has taken a beating because they took on debt to merge with Time Warner and the Justice Dept is roadblocking the merger. Those kinds of things are temporary and a company like T will recover IMO. I thought the fundamentals looked good enough. Debt is scaring off strict value investors, but as others pointed out, it is well covered by earnings IMO. I am in as of today.

[ownyourfuture]

Quote:

Originally Posted by nash031 I bought 675 shares of T on a limit order at 30.50 today. I think T is at least 25% undervalued right now, and it’s historical dividend payout is not a bad thing in a market like this. It’s not going to be a terrific growth stock, but as a value investment, I think it’s about as strong as anything out there right now. In fact, as someone looking at buying, I love the long term downward trend the technician pointed out, personally. T has taken advantage of it lately as well, buying back their own shares at an increasing rate over the last few quarters. T has taken a beating because they took on debt to merge with Time Warner and the Justice Dept is roadblocking the merger. Those kinds of things are temporary and a company like T will recover IMO. I thought the fundamentals looked good enough. Debt is scaring off strict value investors, but as others pointed out, it is well covered by earnings IMO. I am in as of today.

Agree with most of what you stated, & I hope it works out 4 U, but I can't bring myself to pull the trigger........... at least not yet. When I see a stock like T & tell myself how great 'it should be' I always ask myself one question, why does the street hate it ?

[audreyh1]

Quote:

Originally Posted by ownyourfuture Agree with most of what you stated, & I hope it works out 4 U, but I can't bring myself to pull the trigger........... at least not yet. When I see a stock like T & tell myself how great 'it should be' I always ask myself one question, why does the street hate it ?

The street hated Apple for a very long time, then boom (up).

[Mulligan]

Quote:

Originally Posted by The Technician From a technical perspective, I would absolutely not invest in AT&T. If you own it, I would seriously consider selling it and using that money to invest in a stock that is displaying strength, not weakness. AT&T hit a new 52-week low today and is in a long-term downtrend.

If you like that chart, back it up to 1999 from pre “New AT&T” to present day....You will really love that one. Its a factory of sadness stock and the factory runs 24/7. But I have to admit, I have been kicking the tires and thinking a bit myself here though.

[aja8888]

Quote:

Originally Posted by audreyh1 The street hated Apple for a very long time, then boom (up).

You can add Amazon to that list too.

[imoldernu]

Try this.... a look into Comcast, AT&T, Disney, 20th Century Fox, Sky and Time Warner...

https://seekingalpha.com/article/419...over-need-know

[Luck_Club]

T vs FB
Enough said..

[YVRRocketSurgery]

Rising interest rates have given Canadian telecom stocks a bit of a rough ride for the first half of this year too.
There was an interesting comment made by the CEO of BCE who said they would generate more cash flow if interest rates go up an expected half a percent since their pension will move to a surplus and they would not have to provide funding. Perhaps AT&T's pension liability would also benefit from rising rates?
Debt is obviously a concern but how much of a struggle it is is obviously dependent on their cash flow and how they manage their debt financing (how much is coming up for renewal, how much is financed by long term bonds, asset sales).

I'm heavy with the Canadian telecoms, which are likely facing similar challenges, for the yield to provide a base. But I haven't completely used them as a bond/fi replacement.

One X factor is 5G which should be rolling out in full force over the next few years and how much the telecoms can capitalize on this leap in technology.

[target2019]

T can support the dividend. But earnings growth estimated at 2.1%. That is not good, and I'd expect the stock price to stay flat.
VZ looks better with double the earnings growth of T (estimated).

[flintnational]

Quote:

Originally Posted by Mulligan ......... Its a factory of sadness stock and the factory runs 24/7.,......

The DW w*rked for NCR when they were purchased by T. You described my impression of T exactly. But, here I am 27 years later taking a peak again. You would think I had learned my lesson. But, but it's a 6% dividend!