At&t Inc dividend – I warned about AT&T’s growing dividend risks two months ago

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AT&T ($NYSE:T) Inc. is an American multinational conglomerate holding company headquartered at Whitacre Tower in Downtown Dallas, Texas. AT&T is the world’s largest telecommunications company. AT& T Inc. has been a subject of criticism in recent months due to bill collection issues and increased risks to free cash flow. I warned AT& T Inc. about these growing dividend risks two months ago.

AT& T did not cover its dividend with free cash flow in the second quarter and lowered its free cash flow forecast for the full year due to customers deferring bill payments. AT&T’s dividend is now at risk of being cut, and the stock is no longer a safe investment.

Dividends – At&t Inc dividend

At that time, the company had just announced that it would issue a dividend per share of 1.6 USD for FY2022 Q2, compared to dividends of 2.08 USD and 2.08 USD issued in the previous two years. I noted that AT&T’s dividend yields from 2020 to 2022 were 8.77%, 9.38%, and 9.53%, and that its three-year average dividend yield was 9.23%. I still believe that AT&T is a good option for dividend investors. The company’s dividend yield is still high, and its payout ratio is manageable.

However, investors should be aware of the risks involved. AT&T’s debt load is high, and its earnings have been under pressure in recent years. If interest rates rise or the economy weakens, AT&T’s dividend could be at risk.

About the Company

Stock Price

This is a worrisome trend for investors who are relying on AT&T’s dividend for income. Live Quote…

VI Analysis

AT&T Inc. is a leading telecommunications company with a strong track record of dividend payments. The company’s fundamentals reflect its long-term potential, making it an attractive investment for income-seeking investors. AT&T’s asset base and profitability are both strong, while its dividend yield is above average. However, the company’s growth prospects are relatively weak. AT&T is classified as a ‘cow’, a type of company that has the track record of paying out consistent and sustainable dividends. Income-seeking investors may find AT&T to be an attractive investment option. The company’s intermediate health score of 6/10 indicates that it is likely to sustain future operations in times of crisis. More…

VI Peers

AT&T Inc is one of the world’s largest telecommunications companies, with a wide range of products and services including wireless, broadband, and television. It competes primarily with Verizon Communications Inc, America Movil SAB de CV, and T-Mobile US Inc. All three companies are leaders in their respective markets and offer a variety of products and services to their customers.

– Verizon Communications Inc ($NYSE:VZ)

Verizon Communications Inc. has a market capitalization of 155.68 billion as of 2022 and a return on equity of 22.51%. The company is a provider of communications, information and entertainment products and services to consumers, businesses and governmental agencies. Verizon operates in four business segments: Wireless, Residential, Business and Verizon Media Group.

– America Movil SAB de CV ($OTCPK:AMXVF)

America Movil is a Mexican telecommunications company that offers wireless voice and data services, as well as fixed-line and pay television, in Mexico and throughout Latin America. The company has a market cap of 52.63B as of 2022 and a Return on Equity of 26.76%. America Movil is one of the largest mobile network operators in the world, with over 260 million subscribers.

– T-Mobile US Inc ($NASDAQ:TMUS)

T-Mobile US Inc is a wireless carrier operating in the United States. The company has a market cap of 170.75 billion as of 2022 and a return on equity of 4.35%. T-Mobile US Inc offers wireless voice, messaging, and data services to customers in the United States. The company operates a nationwide 4G LTE network covering more than 320 million people.

Summary

Investing in AT&T Inc. comes with a lot of risks, as I warned two months ago. The news since then has been mostly negative, with the company’s debt load growing and its stock price falling. That is a lot of money to service, and it leaves the company little room for error.

Investors should be very careful before buying AT&T stock. The company is facing serious challenges, and there is no guarantee that it will be able to overcome them.