AT&T/ Discovery merger and T dividend

[aja8888]

T said they will pay the current dividend amount util the merger in 2022.

[triangle]

Quote:

Originally Posted by JustKickItForward So, what actually happens on a spin-off as a shareholder? From the principle invested into a pre-spin off stock, post-spin off, would we have the same amount of $ in total stock owned?

Yes that is how it should work.

I was partially paying attention to a video clip from CNBC on the day of the announcement so don't take these numbers as correct (Jim Cramer was speaking if I recall correctly), where he said AT&T shareholders will receive ~75% of the new company in the spin-off without any tax consequence. Which I took to mean that at some point in the future AT&T investor relations will announce that shareholders should take their existing cost basis and assign X% of that towards $T and Y% towards $SPINOFF. Where they would then provide the formula for calculating how many shares you have and their cost basis.

[wmc1000]

I read an opinion on seekingalpha today that basically looked at it like this: T stock price $29 + $3 in Divvys over the next 2 years plus he values the spinoff at a minimum of $8 so basically in his estimation at a total of $40 you get a return of about 38% over the next 2 year period. Just 1 persons take on it.

[aja8888]

I still have 400+ shares of it (for years now). I'm still selling OTM cash covered put options on it every few months and making a few dollars to bank. I'll keep it until "the end" I guess.

[ownyourfuture]

Quote:

Originally Posted by wmc1000 I read an opinion on seekingalpha today that basically looked at it like this: T stock price $29 + $3 in Divvys over the next 2 years plus he values the spinoff at a minimum of $8 so basically in his estimation at a total of $40 you get a return of about 38% over the next 2 year period. Just 1 persons take on it.

Pretty sure someone texted me that same article. If all it would take to get a return of 'about' 38% over the next 2 years, is for the share price to stay around $29 until the spinoff occurs, seems like mutual funds, institutions, & retail investors would be pouring in ?

On the day it was announced, I plugged T into a technical analysis rating website. According to them, there was/is very strong support at $28.90.
I put in a buy order @ that price the same day, then 'literally' forgot about it.

This morning I received an email from Fidelity telling me the order had filled.

[bobandsherry]

Quote:

Originally Posted by ownyourfuture Pretty sure someone texted me that same article. If all it would take to get a return of 'about' 38% over the next 2 years, is for the share price to stay around $29 until the spinoff occurs, seems like mutual funds, institutions, & retail investors would be pouring in ? On the day it was announced, I plugged T into a technical analysis rating website. According to them, there was/is very strong support at $28.90. I put in a buy order @ that price the same day, then 'literally' forgot about it. This morning I received an email from Fidelity telling me the order had filled. Just my luck, today was the first day it traded ex-dividend

What website you use for the technical support level?

Also, T traded Ex-D on 4/8, not sure why you thought today was Ex-D.

[ownyourfuture]

Quote:

Originally Posted by bobandsherry What website you use for the technical support level? Also, T traded Ex-D on 4/8, not sure why you thought today was Ex-D.

Here's the site I use for technical analysis.
https://www.stockconsultant.com
Pretty sure it limits you to 3 or 4 per day.

As for the ex-date, I had it wrong.

[Surewhitey]

Quote:

Originally Posted by bobandsherry What website you use for the technical support level? Also, T traded Ex-D on 4/8, not sure why you thought today was Ex-D.

My experience (limited) with spin off companies is that the value is split. If T is $30 today and spin off company is a $8 value, then T would be adjusted to $22 on effective date.

Regarding the dividend, I'm hoping to see a little bit with the spin off company, like VIAC. Maybe 1-2%? May make the natives happy...

[ncbill]

Quote:

Originally Posted by ownyourfuture Pretty sure someone texted me that same article. If all it would take to get a return of 'about' 38% over the next 2 years, is for the share price to stay around $29 until the spinoff occurs, seems like mutual funds, institutions, & retail investors would be pouring in ? On the day it was announced, I plugged T into a technical analysis rating website. According to them, there was/is very strong support at $28.90. I put in a buy order @ that price the same day, then 'literally' forgot about it. This morning I received an email from Fidelity telling me the order had filled.

Yep, there are a lot of articles over on seekingalpha dot com promoting high-yield stocks, REITs, MLPs, whatever.

Then the comments point out problems with the coverage ratio, or the history of price declines, etc.

[ownyourfuture]

Quote:

Originally Posted by ncbill Yep, there are a lot of articles over on seekingalpha dot com promoting high-yield stocks, REITs, MLPs, whatever. Then the comments point out problems with the coverage ratio, or the history of price declines, etc.

3 days ago, someone copy-pasted an article (allegedly) from Forbes magazine on the T message board.
If it's legit, sounds very similar to the seekingalpha article.





A buyer today investing $30 will gain:

$2.08 in dividends per year until the deal is closed.
Two stocks (AT&T and the NewCo) with a combined worth $35-$40+ when the spin-off occurs in about a year.

That's a total return of 20%-40% in the span of about one year. It's also entirely possible that the NewCo will be trading at such a high valuation that the AT&T investor who sells his share in the NewCo (when it starts trading or a few months later) and re-invests back the funds in AT&T may not lose a single penny of income.

We’re long AT&T and we took a decision from the start not to sell. I personally added to my position yesterday morning at open when the market was in full panic. I will be happy to buy more if the price drops further.

[steelyman]

CNBC article updating the T spinoff. New dividend to be $1.11 per share.

Quote:

AT&T to spin off WarnerMedia in $43 billion Discovery media merger, cuts dividend.

https://www.cnbc.com/2022/02/01/att-...ia-merger.html

[Brat]

My BIL retired from AT&T, that stock is critical for his income. This doesn't bode well for him.

[steelyman]

Quote:

Originally Posted by Brat My BIL retired from AT&T, that stock is critical for his income. This doesn't bode well for him.

Not good. I think that’s a problem for a lot of people. I don’t think Discovery has paid dividends for quite some time.

[Montecfo]

This $29-30 stock price was way off. Maybe the stock is going to plumb the low 20s/high teens. might get interesting there.

And so much for the efficient market. All of this has been known for a long time.

[ncbill]

Is anyone really surprised by the dividend cut considering how poorly AT&T has performed as a company in recent history?

[statsman]

How much closer are they to finally jettisoning their U-verse TV service? You have to figure that's next on the list, right there with trying to sell off their DirecTV satellite service.

[steelyman]

At current prices the new T yield is 4.57%. VZ is 4.75%. Those are in the same general ballpark.

[aja8888]

Quote:

Originally Posted by ncbill Is anyone really surprised by the dividend cut considering how poorly AT&T has performed as a company in recent history?

The planned dividend cut was announced months ago. It's old news. What was not announced was the details of the transaction and how it was to be split out.

[marko]

Quote:

Originally Posted by steelyman At current prices the new T yield is 4.57%. VZ is 4.75%. Those are in the same general ballpark.

Well, 4.57% is still nothing to sneeze at. Still a solid company with an upside now that they've started to clear the air, IMO.

[jldavid47]

Quote:

Originally Posted by steelyman At current prices the new T yield is 4.57%. VZ is 4.75%. Those are in the same general ballpark.

Except that T will not be trading at current prices after the spin-off. It will be trading lower. The combined value at spin off of T + WBD will be equal to the total value of T just prior to the spin-off. My guess is that the yield will be closer to 6% on the new T shares and 0% on the WBD shares which should make the combined yield (at spin-off) 4.57% if the price stays where it is. If I am correct (and prices don't gyrate), then the new T shares will begin trading at about 18.50 per share at spinoff and the value of the new WBD share will be worth about $6 of old T shares.

I imagine many T investors will be selling their WBD shares and buying new T shares which will increase their income. For every 100 shares of T you own you will get 24 WBD shares. What those will be worth at spin-off is anyone's guess.