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AT&T: At A 6.3% Yield, It's T Time For Me

Published Thu, 02 Aug 2018 15:07:11 -0400 on Seeking Alpha

T Time? I've been considering AT&T (T) for my portfolio for a while now. The company has a stellar history, both as part of America's infrastructure, and as a dividend paying company. After waiting for a while, I'm deciding that it's finally time for me to buy, because T and Time Warner Inc. (TWX) have completed their proposed merger transaction. The merger was one of the major sticking points of mine when considering T as an investment earlier this year. T was not in my buy zone at the start of the year since the company's price presented little margin of safety, and the dividend yield (roughly 5.4% at the time) was not really enough to compensate for the potential downside presented by a failure of the merger. However with the bulk of the merger uncertainty removed, Mr. Market has obligingly bid T's price down so that the company offers better than a 6.3% yield. The company's debt load is likely a major contributor to the market's cooling of passion toward the dividend stalwart. However with the new free cash flow the deal will add to T's operating capabilities, I consider the debt load to be manageable, provided management maintains a plan to reduce the debt.
At the final close of the deal, T paid a hefty price to lock down TWX. T paid $42.5 billion in cash and issued 1.185 billion in additional shares. The net debt of the combined company has risen to $176 billion. The management have set a goal from reducing the net debt/EBITDA of the... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
TIME WARNER 92.96   14.0 6.62 1.61 1.69


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