AT&T/ Discovery merger and T dividend

My BIL retired from AT&T, that stock is critical for his income. This doesn't bode well for him.
 
Brat said:
My BIL retired from AT&T, that stock is critical for his income. This doesn't bode well for him.
Click to expand...


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.
 
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.
 
Is anyone really surprised by the dividend cut considering how poorly AT&T has performed as a company in recent history?
 
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.
 
Last edited:
At current prices the new T yield is 4.57%. VZ is 4.75%. Those are in the same general ballpark.
 
ncbill said:
Is anyone really surprised by the dividend cut considering how poorly AT&T has performed as a company in recent history?
Click to expand...

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.
 
steelyman said:
At current prices the new T yield is 4.57%. VZ is 4.75%. Those are in the same general ballpark.
Click to expand...

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.
 
steelyman said:
At current prices the new T yield is 4.57%. VZ is 4.75%. Those are in the same general ballpark.
Click to expand...
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.
 
Last edited:
If you want to see what happens after a spin-off, look at IBM on 11/3/21 and 11/4/21. At the end of the day on 11/3 IBM spun-off KD. Each IBM shareholder got 0.20 KD shares for each IBM share. The opening price for KD on 11/4 was 28.41 which means that IBM stock got adjusted downward by $5.68 per share due to the spin-off.

On a chart it looks like IBM stock closed down $6.28 on 11/4. In fact, it closed down $0.60 on the day after accounting for the price adjustment from the spin-off.

AT&T will exhibit similar behavior on the first trading day after the spinoff.

Spin-offs neither add to nor destroy the value of stockholder shares at the time of the spin-off.
 
Last edited:
AT&T/ Discovery merger and T dividend

jldavid47 said:
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.
Click to expand...


I think this is an important point. I have T in taxable and Roth brokerage accounts. I sold covered calls against a portion of it and with the recent drop in price it’s possible they may expire worthless (but I keep the premium).

Apart from that I doubt I’ll do anything more until the situation is better clarified. I’m not very interested in media/content but hope T’s move in narrowing focus is good in the long run.

Wait and see for me.
 
Not at all related to T but I experienced a different spinoff this week. I’d held Exelon (EXC) for quite a while. This week EXC completed a spinoff of Constellation Energy (CEG). Both are utilities. I’d never heard of CEG before but it appears to be focused on carbon reduction which is A-OK with me. No dividends yet.

I’ll hang on to both and watch the price movements. I’d probably not have invested in CEG on my own.
 
The problem with AT&T is that a huge % of holders are aged AT&T retirees and not experienced investors. They will be blindsided by this and trying to figure out what to do next. My BIL will be among those.
 
The largest holders of AT&T I would guess are index funds. Un-informed investors will feel blindsided if this is their only stock holding, and they don't follow the news at all.

But old guys like my deceased father-in law always preferred Verizon over AT&T and held about 5x's more...he wanted a little spending money, and both T and V provided that. It was slow growth before and will be slow growth after. T's dividend will fall as it must. Maybe some shares of WBD will compensate sufficiently, maybe it won't. I'll still have some spending money...
 
AT&T/ Discovery merger and T dividend

It’s been known this would happen for quite a while so “blindsided” might be a little harsh. But classic “widows and orphans” have good reason for concern.
 
steelyman said:
Not at all related to T but I experienced a different spinoff this week. I’d held Exelon (EXC) for quite a while. This week EXC completed a spinoff of Constellation Energy (CEG). Both are utilities. I’d never heard of CEG before but it appears to be focused on carbon reduction which is A-OK with me. No dividends yet.

I’ll hang on to both and watch the price movements. I’d probably not have invested in CEG on my own.
Click to expand...

Same here on EXC. I was surprised to find this spin off and indifferent to the outcome. I actually use Constellation for electricity in TX...

I have a lot of both EXC and T, unfortunately on the latter...
 
Bought my first 25 shares of T in my IRA @ $32.29 (February 2014)
8 years later, shares are 8$ lower. I nibbled at it 3 or 4 times during those eight years 'thinking' shares were undervalued. Because of that, in spite of reinvesting dividends, I'm down 8.92%

The most telling point for me is that on the day this deal was announced, shares traded as high as $32. Been downhill ever since. I also own a small amount in my HSA. I take 100% ownership for this.

On the other hand, the sweetheart consultant deal given to the previous CEO CEO Randall Stephenson, makes me nauseous, same for the current CEOs pay of 25 million in 2021. Capitalism definitely has a dark-side. Where else can one fail so spectacularly & be rewarded ?

Selling them all today.
Thinking 1/2 the proceeds in VZ & the other 1/2 in one of the ETFs mentioned earlier in the thread.

*Changed my mind: I've held the shares this long, figured I might as well hold just in case this turns out to be a successful deal*
 
Last edited:
ownyourfuture said:
......
On the other hand, the sweetheart consultant deal given to the previous CEO CEO Randall Stephenson, makes me nauseous, same for the current CEOs pay of 25 million in 2021. Capitalism definitely has a dark-side. Where else can one fail so spectacularly & be rewarded ?

...
Click to expand...

+1,000,000,000

<my rant>

Many CEO's who are simply employees of the company, treat their income demands as if they invented the company and own all of it.
If I create a company and own all of it, it's my right to pay myself whatever I want, but not when they are simply a hired employee.

Seems like the board members and CEO types come from the same neighborhood and have an "understanding", resulting in high pay.

The theory of high pay is you are paying for high skill, so of course people who believe that would insist you need to raise those failing CEO's pay so they will bother to do a good job. Frankly to me it's BS.

Most importantly it's taking money from the shareholders, if the stock clerk was found with $21 Million in his house from the company, it would be jail time. For a CEO, it's legal theft.
 
ownyourfuture said:
Bought my first 25 shares of T in my IRA @ $32.29 (February 2014)
8 years later, shares are 8$ lower. I nibbled at it 3 or 4 times during those eight years 'thinking' shares were undervalued. Because of that, in spite of reinvesting dividends, I'm down 8.92%

The most telling point for me is that on the day this deal was announced, shares traded as high as $32. Been downhill ever since. I also own a small amount in my HSA. I take 100% ownership for this.

On the other hand, the sweetheart consultant deal given to the previous CEO CEO Randall Stephenson, makes me nauseous, same for the current CEOs pay of 25 million in 2021. Capitalism definitely has a dark-side. Where else can one fail so spectacularly & be rewarded ?

Selling them all today.
Thinking 1/2 the proceeds in VZ & the other 1/2 in one of the ETFs mentioned earlier in the thread.

*Changed my mind: I've held the shares this long, figured I might as well hold just in case this turns out to be a successful deal*
Click to expand...
I've had similar thoughts, but decided to hold the original 66 shares we have, and added 34 at about $30/share.

If I want to really drag myself through despair, I compare SCHD to T and VZ.

But I do see that T is 5-10% worse off than integrated telecom services in a year. So even VZ is not performing so great, but definitely better than T, but behind diversified SCHG.

Soon I'll have a slimmer T, and merged WB/Discovery. In the future I may divest just like T, or maybe I won't.
 
Rising rates are krytonite to high div, low growth stocks. At higher rates those divs are just worth less, it's just math.

I have owned T and made good money trading it. But rising rates are a new headwind to keep in mind.
 
ownyourfuture said:
Bought my first 25 shares of T in my IRA @ $32.29 (February 2014)
8 years later, shares are 8$ lower. I nibbled at it 3 or 4 times during those eight years 'thinking' shares were undervalued. Because of that, in spite of reinvesting dividends, I'm down 8.92% ...
Click to expand...

Good news, bad news.

Good news: According to my sources, you are not down 8.92%. Not sure how you got that (edit: I see you 'nibbled' with other purchases, so now I do see how your numbers could be different), but these sources show that with reinvestment, you'd be up ~ 13.8%

https://tinyurl.com/y7eqbl9m < shortlink to www.portfoliovisualizer.com

https://stockcharts.com/freecharts/perf.php?vti,t < set bar to the dates

Bad news: Investments must always be looked at relative to the alternatives/benchmark, and in this case, a Total Market Fund/ETF is certainly a reasonable and simple alternative for a personal investor (opportunity cost). Had you invested in VTI, you'd be up ~ 175%.

Ahhh, I see you only had 25 shares, so ~ $807 invested, so we're talking $919 from T vs $2,222 in the market, a $1,303 delta. (edit: your 'nibbles' would have resulted in more shares, so this probably understates it - sorry - good luck with the future value!)

-ERD50
 
Last edited:
ERD50 said:
According to my sources, you are not down 8.92%
Click to expand...

You're right, as of the close today, I'm actually down 9.11%

This should clear it all up.
29143-albums233-picture2582.jpg


As I stated in my last post, I take full ownership for these losses. On the other hand, the previous CEOs sweetheart consultant deal rewarded him when he retired seems ridiculous.

Though he is officially no longer part of AT&T's board, he will be paid $1 million over the next year (until Jan. 21, 2022, to be exact) for his consulting services. Even better, Stephenson is not allowed to work more than 20% of the hours he worked as a full-time employee.

That's not counting the $64 million golden parachute. It's obvious that 'some' high-level executives are severely lacking in honor and/or integrity.

https://www.forbes.com/sites/jackke...-gold-plated-retirement-plan/?sh=76ee400559bd

Kudos to Sunset for his comment from a couple days ago.
"Many CEO's who are simply employees of the company, treat their income demands as if they invented the company and own all of it.
If I create a company and own all of it, it's my right to pay myself whatever I want, but not when they are simply a hired employee"
 
Last edited:
You must log in or register to reply here.

Similar threads

calmloki
Quicken and T-Bills recording
Replies
5
Views
594
JoeWras
JoeWras
sengsational
Meditation Resolution
2 3 4
Replies
81
Views
4K
ERD50
E
S
I'm FIRE(d)!
Replies
18
Views
3K
Dtail
D
R
Tello Customers-Sprint/T-Mobile Merger
Replies
10
Views
2K
teetee
teetee
S
Hi, I'm Steve and I want to retire in my 40's
Replies
21
Views
4K
ncbill
N

Latest posts

Back
Top Bottom