Did Jim Cramer justifiably add AT&T execs to his wall of shame?

AT&T Inc. (NYSE:T) said last week that its entertainment subsidiary WarnerMedia reached a deal to merge with Discovery Communications Inc (NASDAQ:DISCA). For context, T acquired TimeWarner in 2018 for $85 billion under the leadership of former CEO Randall Stephenson. 

The latest developments at AT&T have not been well received among investors and some in the investment community. Perhaps among the most vocal critics is CNBC “Mad Money” host Jim Cramer. On Thursday, he added current CEO John Stankey and Stephenson to his “wall of shame.”

But is Cramer right in doing so? Let’s take a look.

Analysis: T stock loses its dividend appeal

In conjunction with the Discovery deal, AT&T said that it would be cutting dividends by up to 50% following the spinoff. This may have directly contributed to the major pullback in the T stock price. 

The company has been one of the most beloved dividend stocks for anyone who prioritizes cash generation over share appreciation. It has provided these types of investors with a regular flow of income for years. The announcement of a dividend cut pushed Cramer to add its execs to the wall of shame. He said:

Reportedly, Cramer considered adding the entire AT&T board to the wall of shame before narrowing the number to just two. He has suggested that Stephenson’s $64 million severance pay should be reduced due to the part he played in the acquisition of TimeWarner.

By that logic, T stock automatically loses much of the appeal it had to offer. But fundamental analysis alone doesn’t tell the whole story as many traders and investors aren’t particularly interested in what Cramer has to say and prioritize what the T stock chart is saying.

AT&T stock technical overview

Technically, shares of AT&T appear to have recently bounced back following a tough start to the week. The stock price is now pinned just above the 100-day moving average in the daily chart. The stock temporarily rose to trade at the highest level since the start of the COVID-19 on Monday before making the pullback.

Investors will be targeting rebound profits at around the key resistance levels at $31.93 and $33.90. Key support levels can be found at $27.95 and $26.32.

Bottom line: AT&T is still a quality stock

AT&T may be facing some criticism following the announcement of a dividend cut and the spinoff of WarnerMedia, but fundamentally, it is still a very quality stock. Investors can choose to focus on the positives, which include, among others, the opportunity in 5G networks and a strong business model.

At the current dividend yield of 6.93%, even reducing that by 50% will still be attractive to dividend investors, albeit less so at around 3.5% versus the 1.33% dividend yield the broader S&P 500 index generates. Therefore, while Cramer may have valid reasons to add T stock to his wall of shame, the company can still play a role in investors' portfolios amid expectations for a rebound in the stock and a solid dividend payment.