Time To Buy AT&T Stock And Lock In The 7% Dividend Yield? | Investing.com


After years of uncertainty and underperformance, it appears issues are transferring in the suitable course for America’s largest telecom operator, AT&T (NYSE:).

During the previous couple of months, the debt-laden telecom large has been capable of present that its is gaining momentum. The Dallas, Texas-based media firm is on a monitor to enhance its portfolio, which may generate engaging returns.

Last month, AT&T introduced it’s going to off-load its loss-making DirecTV operations in a cope with personal fairness agency TPG. The transfer creates a three way partnership through which TPG shall be liable for working DirecTV and AT&T’s different pay-TV operations. 

Through this association, AT&T will get $7.6 billion in money, with the brand new DirecTV taking up $5.eight billion in dedicated debt financing. With the sale, AT&T is nearer to changing into a smaller, fashionable communications and media firm with a transparent deal with its wi-fi and streaming companies. 

AT&T’s video-streaming enterprise, HBO Max, can also be taking form after some uncertainty about its place in a market dominated by Netflix (NASDAQ:) and Disney (NYSE:). AT&T mentioned this month it’s releasing an ad-supported model of its HBO Max streaming service in June to profit from the pent-up demand from entrepreneurs searching for to succeed in the HBO Max viewers. 

70 Million Subscribers

Dallas-based AT&T is aiming to convey HBO Max to 60 worldwide markets this yr, in an effort to broaden its geographic attain. The objective is to spice up HBO Max and HBO collectively, so that they end 2021 with 67 million to 70 million worldwide subscribers. 

In December, the corporate shocked Hollywood when its Warner Bros. studio division mentioned it will launch its whole 2021 slate of theatrical movies concurrently in theaters and on the streaming service.

These encouraging indicators, nonetheless, don’t cover the truth that AT&T has been a foul funding throughout the previous 5 years, when the inventory misplaced greater than 20% of its worth. During the identical interval, the benchmark delivered 90% in whole returns. 

AT&T Weekly Chart.

John Stankey, the corporate’s new CEO, believes AT&T’s HBO wager will repay over the long term and buyers ought to stay assured about his turnaround efforts. Raymond James analysts, whereas upgrading the telecom large’s inventory to outperform with a $32 worth goal, mentioned in a current observe that the scenario will proceed to enhance for the corporate over the subsequent 12 months, making its inventory a strong whole return story.  

The observe learn partially:

“With HBO Max lastly on the dominant streaming {hardware} platforms, we consider the streaming service will start to see important subscriber positive factors, and the inventory ought to react nicely to those positive factors.”

AT&T inventory has gained about 9% throughout the previous month, closing Monday at $30.57. It pays $0.52 a share quarterly, a dividend payout that interprets right into a 7% annual yield.

Bottom Line

Early success on its asset gross sales and growing the subscriber base for its video-streaming business reveals that CEO Stankey is succeeding at placing AT&T’s home so as and unlocking some worth for its shareholders. But, in our view, it’s on an extended street to restoration and it’s powerful to see its inventory providing an enormous upside potential after current positive factors.

That mentioned, AT&T stays an appropriate candidate for buyers who want to earn a gentle revenue stream by way of its dividend.  





Source link