Is AT&T a buy or sell in November?

Is AT&T a buy or sell in November?
Written by:
Stanko Iliev
11th November, 18:20
Updated: 11th November, 18:22
  • With the stability of a 7.2% dividend yield, AT&T has a very good risk/reward ratio currently
  • AT&T has paid more than $40B dividends to its shareholders in the last three years
  • If the price jumps above $29 the next target could be located at $30 or even $35

AT&T (NYSE: T) shares have been moving in an uptrend last two weeks and for now, there is no signal of the trend reversal. Drugmaker Pfizer announced that it could have a coronavirus vaccine ready in the United States by the end of this year and this adds further support to AT&T stock.

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. The company’s recent earnings and its overall budget have continued to perform significantly above expectations and AT&T has plenty of room to continue to offer dividend hikes.

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Analysts expect EPS growth to be about $3.75 in 2020 and approach $4.50 by 2022. AT&T shares have advanced from $26.3 to $29 in less than several days and the current price stands around $28.7.

The US stock market is supported by upbeat over the prospect of a divided Congress, COVID-19 vaccine news and less risk of major policy changes.

Joe Biden won the presidential election in his birth state of Pennsylvania last Saturday and become 46th president of the United States. Pfizer and BioNTech announced that their jointly developed COVID-19 vaccine which is effective in more than 90% of the patients.

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).

AT&T has maintained multi-decade growth in its dividend payments and this stock could be a very good investment option. With the stability of a 7.2% 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.

On the other side, concerns about sluggish economic growth amid the ongoing pandemic continue to dominate the financial markets. The US reported over 130K new cases in one day and the pandemic pushed U.S. hospitals to the brink of capacity.

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 resistance level at $29

Data source: tradingview.com

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 $27 and $26, $29 and $30 represent the resistance levels. If the price jumps above $29 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.

Summary

AT&T’s dividend is safe and the company is handling the coronavirus threat very well. 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. If we compare total stockholders’ equity of $193.45B and the market capitalization of $205B, we can notice that this stock is not overvalued and maybe now could be a good time to buy this stock. 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. 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.

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