AT&T Stock is a Must BUY right now. Why I'm buying more of this Dividend Stock.

0:00 Intro
What’s going on everyone, I’m Andrew and this is Broke Man Finance.
The biggest question right now concerning AT&T (T) stock for investors is it a good time or buy or continue to hold off. Their stock has declined the past couple years causing some concerns, but they are still paying out that huge dividend.

I’m going to cover a few things in today’s video that may help you make that decision on whether to buy or to continue to hold. We’re discussing their dividend payout, debt, free cash flow and what the general forecast looks like for them going into 2021.
00:55 Dividend Value
One of the main reasons people buy AT&T or it in their portfolio is their incredible dividend payout. For a long time, they have been labeled as one of the dividend aristocrats due to their steady payout.

But just how good is their dividend and why it is so popular. Right now their dividend yield is at 7.61% that pays out each quarter. Last quarter that equaled to .52 cents per share or an annual payout of 2.08 each share. The dividend growth has also increased the past 20 consecutive years as well. What’s has been impressive for me, it’s during this entire year when other major companies have suspended or cut dividend payouts, AT&T has kept theirs.
So with a great dividend, some people are asking why the stock has seen such a noticeable decrease.
2:06 Reason for Stock Decrease
Just this year alone their stock has decreased around 30% and around 20% the past 5 years. One of the main reasons is Debt. At the end of Q2 of 2020 they had a reported of 152 Billion dollars of debt.
Several years ago, AT&T bought DirectTV, Time Warner and launched HBOMax. These acquisitions added massive amounts of debt their books and poor launch of HBOMax didn’t help them out.
At a time where almost everyone and their brother has a streaming service, is hard to really emerge as the top dog with competitors like Amazon, Netflix, and Disney to deal with.
4:05 Why I'm buying more!
Let’s change directions now and I’m going to share with you the reasons why I’m leaning towards buying more stock right now at the current price. I’m not alone on this opinion, there are a lot of analyst that don’t think AT&T is done and they have a promising future ahead of them.

First is Debt payoff. AT&T's CEO John Stankey is focused on several things and one of his top priorities is paying their debt off which includes several things.

Since the close of the TimeWarner acquisitions, they have already paid off about 30 billion of that debt. They are looking to sell Direct TV off to private investors and the estimated value of that sale is between 20-30 billion. DirectTV and Cable services has seen over double digit losses in customers, mainly due to all the streaming services available to consumers. So this sell is a smart business decision, a way to get rid of parts of the company that is dragging it down.

Next is Free Cash Flow. While debt is concerning, their FCF has been impressive. In 2019, they reported to have had around 29 Billion dollars in FCF alone. 15 Billion went directly to pay the dividends which left around 14 billion to pay towards debt or other projects. In Q2 of 2020, they reported they had over 7.9 billion in FCF alone.

Their added focus on improving their streaming service of HBOMax will only help them increase revenue and add to that FCF going into 2021. They had a slow start at first but it seems to be picking up now and the amount of subscribers has risen to around 36 million in total.

This should only increase as they have prioritized to expand their 5G and Fiber services to rural America the next several years.

They just recently announced the US Army has selected the First Net Program for over 72 installations across the US and Puerto Rico. This partnership will allow more effective and advanced communication for the Army and First responders during national disasters and emergencies.

I think there is potential to kill two birds with one stone. Meaning that not only is AT&T providing an insane dividend payout on a stock under 30 dollars a share, but the chance of this stock increasing towards 40 dollars a share is very likely.

I’m labeling this stock as a slight buy right now. They are announcing Q3 earnings report on October 22nd so I believe this stock has a great chance of stabilizing some and possibly increasing as long as the economy continues to improve going into 2021.

I like the vision the CEO has. He recognizes that offloading sluggish companies like DirectTV will not only bring in a quick injection of cash, but also free up massive amounts of debt. While at the same time, focusing on services to increase revenue and bring them back to being competitive against Verizon T-Mobile.
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