Here is why T is the ultimate dividend stock
AT&T Inc. (NYSE:T) is the world's largest telecommunications company and the largest provider of mobile telephone services in the United States. The company provides more than 100 million U.S. consumers with entertainment and communications experiences across TV, mobile, and broadband. Its subsidiary, WarnerMedia, creates and distributes entertainment content to global audiences through its consumer brands, including HBO, HBO Max, Warner Bros., TNT, TBS, truTV, CNN, Cartoon Network, Adult Swim, and Turner Classic Movies.
AT&T recently announced that Sony Pictures Entertainment has completed its acquisition of AT&T’s Crunchyroll anime business through Funimation Global Group. Funimation is a joint venture between Sony Picture Entertainment and Sony Music Entertainment subsidiary, Aniplex. The agreement was first announced in December 2020 and completed this month.
AT&T stock has decreased approximately 4% year-to-date and is down 19% since reaching its annual high of $33.88 on May 17. Additionally, shares of T have decreased by 7% year-over-year, and the stock is only up 5% since dropping to an annual low of $26.35 last October.
On the earnings front, AT&T has beat or met Wall Street's earnings expectations on all four of its most recent earnings reports. For Q3 of 2020, T met analyst estimates, reporting an EPS of $0.76. For Q4 of 2020, AT&T's EPS decreased to $0.75, but beat expectations by a margin of $0.02. For Q1 of 2021, T had an increase in earnings, rising to $0.86 per share. The telecommunications company also beat estimates by a margin of $0.08. Most recently, for Q2 of 2021, AT&T reported an EPS of $0.89 and beat expectations by a margin of $0.10.
From a fundamental point of view, the biggest risks involved with the telecom company include its balance sheet and its falling net income. AT&T only has $9.74 billion in cash and $179.44 billion in debt on the balance sheet, which places its total debt amount at a higher value than its entire market cap. T also experienced a net income decrease of about $19.36 billion or 52% between fiscal 2017 and fiscal 2019, which was even before its business saw the Covid-19 pandemic’s negative impact.
AT&T offers a forward dividend of $2.08, which is an extremely high dividend yield of 7.54% for a company with a market cap of nearly $200 billion. In addition, AT&T stock has a great valuation at the moment, with T's forward price-earnings ratio estimated at 8.44. Overall, it is difficult to find another stock that provides such a high return through dividends, as well as an elevated sense of security that comes with being an established conglomerate.