AT&T Inc. (NYSE: T) has become boring and is considered a dead stock by many investors and analysts. That doesn’t change one thing though: AT&T is still the highest dividend yield of the entire Dow Jones Industrial Average, and by almost a full percentage point. Now we have Credit Suisse’s Joseph Mastrogiovanni, who has maintained his Outperform rating and $39 price target on the stock following meetings with AT&T and recent announcements.

The call is following investor relations meetings and the positive tone from those meetings. If Credit Suisse is correct, then AT&T is undervalued by nearly 12% from the $34.91 closing price of Friday. There is also AT&T’s 5.3% dividend yield. Credit Suisse is much more aggressive than the rest of the street here because AT&T’s consensus analyst price target is closer to $35.70.

Monday’s analyst note suggested that AT&T provided 2015 capex guidance that was about 13.5% below consensus expectations. The news also includes the announced acquisition of Iusacell in Mexico for $2.5 billion, including the assumption of debt. Mastrogiovanni said:

We think this transaction gives AT&T a foothold in Mexico that it could use to expand in the region. We do not think it precludes AT&T from bidding on America Movil assets that are expected to come to market. In fact, it could allow AT&T to purchase America Movil assets at a better price, in our opinion. AT&T’s entrance into Mexico should increase the level of competition. Potential bidders should take that into consideration when evaluating a potential AMX sale and could assign a lower value or decide not to bid.

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Another positive is this notion of slower capital spending, suggesting better 2015 free cash flow (FCF). Mastrogiovanni noted that AT&T expects 2015 capex to be in the $18 billion range, versus the firm’s estimate of $20.5 billion — implying a potential boost to FCF of up to $2.5 billion. Credit Suisse’s 2015 FCF forecast is $11.1 billion. On the dividend and other issues, Mastrogiovanni said:

Free cash flow of $13 billion would imply year over year growth of nearly 20% and a dividend payout ratio of 77%, excluding pending acquisitions. In addition to this new found free cash flow, our checks have suggested that there is a good chance we get tax extenders now that the elections are over. If this goes through, it could add up to another $2 billion to FCF.

Another driver was that AT&T indicated that it feels it can achieve long-term revenue growth in line with gross domestic product or better. Shares were up 0.5% at $35.09 in mid-afternoon trading on Monday, against a 52-week range of $31.74 to $37.48.

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