Summary
- We recommended this as a must-buy under $27 and the stock is now up 20.5% from its lows in December 2018.
- With earnings being reported soon, an understanding of where the critical metrics are coming into the quarter matter.
- For the first time, we project the dividend payout ratio to substantially decrease.
- To keep the dividend payout ratio under 60% for the quarter, we will need to see about $6.1 billion in free cash flow.
- This idea was discussed in more depth with members of my private investing community, BAD BEAT Investing. Start your free trial today »
We want investors to remember that AT&T (NYSE:T) had a volatile 2017 and an even worse 2018. Major milestones such as the closing of the Time Warner deal occurred. The company started to really recognize its debt burden and began to offload assets. All the while it has continued to compete as a global telecommunications giant known for its healthy dividend yield. It is a fantastic income name, but in our opinion also serves as a wonderful name to compound in a tax-favored account for decades. AT&T is a long-term, multi-decade holding for us. So long as dividend growth continues and performance is reasonable, we are staying in the name. What is interesting though is that even with this being a name we are taking a long view with, we actually pushed it as a trading recommendation over at BAD BEAT Investing calling it a must-buy under $27.
Here we are now 4 months from the call. What no one is telling you is that AT&T has just entered the bull mode. And we define bull/bear mode by a 20% move up or down. Well, the stock at $32.30 is up 20.5% from its lows in December 2018 of $26.80, entering bull mode:
