Nearing the end of a year-long change is AT&T stock. By eliminating its entertainment division, AT&T Inc (NYSE:T) consolidated operations and streamlined its workflow to concentrate on its primary business strategy. After this much-needed course correction, AT&T is, in my opinion, in a great position to thrive, with its dividend remaining at the center of its investor pitch.
Markets are not responding, but AT&T is not the only offender. Numerous businesses are having trouble due to ongoing interest rate increases, inflation, supply chain problems, Russia’s invasion of Ukraine, and other supply chain problems. Which players can surpass their peers in a challenging situation will determine the future.
In a crowded, fiercely competitive market, AT&T stock competes. Investors shouldn’t anticipate rapid growth. But for AT&T stock, that is not the objective. The business is not well known for its expansion. Instead, the company’s hefty payout is what most investors are drawn to. A dividend yield of over 7% is offered by AT&T. One of the highest on the market is this. AT&T can now refocus on what it does best: running a steady, sustainable business and giving the majority of its revenues to shareholders since it concentrates on its legacy businesses.
AT&T Stock Performed Admirably this Year
Typically, AT&T stock is seen as a low-risk investment. One of the largest global telecommunications corporations in the world, the company has been in operation for well over a century. It participates in the provision of landline, wireless, and broadband services.
Additionally, AT&T stock offers investors some downside protection through its robust dividend program. Even though AT&T is not immune to economic downturns, its scale and diversity usually make it less vulnerable than other businesses.
After experimenting with entertainment, the corporation is now making a comeback despite some recent difficult years. It accrued massive debt by spending billions on its deals to buy Warner Media’s and DIRECTV’s assets. By 2020, AT&T had racked up a total debt of $157.3 billion before selling any of its holdings.
However, when that didn’t go as planned, management deserves praise for shifting direction and returning to what it does best. For telecommunications, AT&T stock is the best. The business keeps setting the standard for technology and customer support. One of the best wireless service providers for years, AT&T provides a dependable and quick network. Now that its venture into entertainment has ended, it can focus on what it does best.
And in the end, we all achieve our goals. Due to its outstanding network performance, AT&T increased the number of postpaid phone customers in the second quarter by over 813,000 compared to last year. These figures are among the best for the second quarter in more than ten years. However, T-Mobile (NASDAQ:TMUS) displayed strong results with 723,000 net postpaid phone additions.
According to the most recent quarterly figures, postpaid phone churn has decreased slightly but steadily, from 0.69% in the previous quarter to 0.75% this quarter. Due to these fantastic results, AT&T has decided to increase its wireless revenue projection for 2022 from 3%+ growth to 4.5%–5% growth and has confirmed its guidance for free cash flow in the $20 billion range in 2023.
Investors Seeking Income will Continue to Embrace AT&T
The latest actions taken by AT&T are wise. They will restore trust in the business and put it in a strong position for the remainder of the year. However, AT&T has remained a favorite among investors for the most prolonged period due to its dividend.
Investors are primarily drawn to AT&T because of the dividend. The quarterly dividend of 27.75 cents compared to the rest of its competitors is a significant component of the company’s overall strategy. Thanks to a robust free cash flow that will continue to increase, it can afford to pay the large dividend.
The business is working on a three-year capital investment plan that will last through 2025. It can now anticipate increased free cash flow since a sizable piece of the investment plan has been finished. Additionally, its debt level is at its lowest point since 2017. These elements will all work to protect the dividend. This is crucial from AT&T’s perspective.
This company, which has increased its dividends for over 25 years and was a Dividend Aristocrat until last year, suddenly snapped its run. The telecom company paid its stockholders $2.08 per share before the WarnerMedia split. It is currently $1.11 per share, though. This is a crucial factor in why shares are currently trading at such an appealing valuation. However, because the dividend yield is already at a more reasonable 7%, AT&T will make up lost ground as we advance.
Takeaway
Now that AT&T’s failed journey into the entertainment industry is ended, the business can advance and reward investors. In addition to selling off non-essential assets and reducing debt, the corporation has refocused its operations on its key competencies.
Now prepared to compete in the 5G era, AT&T is a leaner, meaner machine. With the best 5G network available, AT&T can benefit from leading the way in this brand-new technological era. AT&T’s stock is attractively valued. Few firms come close to AT&T for income investors looking for consistency and downside protection.
However, when that didn’t go as planned, management deserves praise for shifting direction and returning to what it does best. When it comes to telecommunications, AT&T is the best. The business has a long history of innovation and keeps setting the standard for both technology and customer support. One of the best wireless service providers for years, AT&T provides a dependable and quick network. Now that its venture into entertainment is ended, it can focus once more on what it does best.
And in the end, we all achieve our goals. Due in major part to its outstanding network performance, AT&T was able to increase the number of its postpaid phone customers in the second quarter by over 813,000 compared to the same period last year. For the second quarter in more than ten years, these figures are among the best. T-Mobile (NASDAQ:TMUS), however, displayed strong results with 723,000 net postpaid phone additions.
According to the most recent quarterly figures, postpaid phone churn has also decreased slightly but steadily, from 0.69% in the previous quarter to 0.75% this quarter. Due to these fantastic results, AT&T has decided to increase its wireless revenue projection for 2022 from 3%+ growth to 4.5%–5% growth and has confirmed its guidance for free cash flow in the $20 billion range in 2023.
Investors Seeking Income will Continue to Embrace AT&T
The latest actions taken by AT&T are wise. They will restore trust in the business and put it in a strong position for the remainder of the year. However, due to its dividend, AT&T has remained a favorite among investors for the longest period.
Investors are mostly drawn to AT&T because of the dividend. Compared to the rest of its competitors, the company pays a quarterly dividend of 27.75 cents. The dividend is a significant component of the company’s overall strategy. Thanks to a robust free cash flow that will continue to increase, it can afford to pay the large dividend.
The business is now working on a three-year capital investment plan that will last through 2025. It can now anticipate increased free cash flow since a sizable piece of the investment plan has been finished. Additionally, its debt level is at its lowest point since 2017. These elements will all work to protect the dividend. This is crucial from AT&T’s perspective.
This company, which has increased its dividends for more than 25 years in a row and was a Dividend Aristocrat until last year, suddenly snapped its run. The telecom company paid its stockholders $2.08 per share before the WarnerMedia split. It is currently $1.11 per share, though. This is a key factor in why shares are currently trading at such an appealing valuation. However, because the dividend yield is already at a more reasonable 7%, AT&T stock will make up lost ground going forward.
Takeaway
Now that AT&T’s failed journey into the entertainment industry is ended, the business can advance and reward investors. In addition to selling off non-essential assets and reducing debt, the corporation has refocused its operations on its key competencies.
Now prepared to compete in the 5G era, AT&T is a leaner, meaner machine. With the best 5G network available, AT&T can benefit from leading the way in this brand-new technological era. In addition to having one of the highest dividend yields on the market, AT&T’s stock is attractively valued. Few firms come close to AT&T for income investors looking for consistency and downside protection.
Featured Image: Megapixl © F11
Author Valerie Remorosa 
