AT&T shares are down 31% YTD. Should I invest?
- AT&T has paid more than $40B dividends to its shareholders in the last three years
- This stock has a very good risk/reward ratio currently
- AT&T has cut net debt by about $30B since Q1 and the company maintains investments in its focus areas
AT&T (NYSE: T) shares have weakened from $39.5 below $26.5 in less than several months and the current price stands around $27. Analysts expect EPS growth to be about $3.75 in 2020 and approach $4.50 by 2022, with Q3 2020 likely to see a drop to $0.81 in EPS, then ramp up.
Fundamental analysis: The current dividend makes AT&T one of the steadier players in the region
AT&T Inc. is handling the coronavirus threat very well and it is attracting investors’ attention in this uncertainty on the financial markets. AT&T has maintained multi-decade growth in its dividend payments and this stock could be a very good investment option.
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With the stability of a 7.74% dividend yield, AT&T has a very good risk/reward ratio currently and investors in this stock stand to gain a lot more for taking a comparatively smaller risk. The company increased its revenue in 2019 to $181.19B from $170.75B in 2018 and the growth projects will ensure that the numbers will be moving up in the future.
Chief Financial Officer John Stephens said recently that he is confident in AT&T’s ability to generate strong cash flows in the upcoming period. AT&T has cut net debt by about $30B since Q1 and the company maintains investments in its focus areas (broadband connectivity via fiber/5G, software-based entertainment via HBO Max and AT&T TV).
If we compare total stockholders’ equity of $193.45B and the market capitalization of $191.53B, we can notice that this stock is not overvalued and maybe now could be a good time to buy this stock. According to the latest news, AT&T could roll out wireless phone plans that are partly subsidized by advertising within a year.
This would allow AT&T to sell ads at higher rates which will certainly increase revenues of the company in the upcoming period. AT&T has paid more than $40B dividends to its shareholders in the last three years and this number can be even bigger in the future.
There are some risks when it comes to buying AT&T shares, but the current dividend makes it one of the steadier players in the region.
Technical Analysis: Bulls are focused on breaking the strong resistance level at $30
When we take a look at the chart above ( one year period), we can see that the price of this stock has weakened from $39.5 to $26.02. On this chart, I marked important resistance and support levels.
The important support levels are $26 and $25, $28 and $30 represent the resistance levels. If the price jumps above $28 it would be a “buy” signal and we have the open way to $30.
Rising above $30 supports the continuation of the bullish trend and the next price target could be located around $35. If the price falls in the upcoming period, every price in a range from $20 – $25 could be a very good opportunity to invest in AT&T shares.
AT&T’s dividend is safe and the company is handling the coronavirus threat very well. Chief Financial Officer John Stephens said that he is confident in AT&T’s ability to generate strong cash flows in the upcoming period. AT&T has a very good risk/reward ratio currently and investors in this stock stand to gain a lot more for taking a comparatively smaller risk.
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