AT&T Inc. (NYSE: T) is set to have its analysts day on August 12, when it will outline the future of the company given the completion of the DirecTV acquisition. The company is already considered one of the safest dividends on Wall Street, but this acquisition most definitely shores up this position.
The company has now closed on its DirecTV acquisition and it should have even more dividend coverage for its high-yield dividend as a result. While much was noted about the stock pulling back, there was a wave of analyst upgrades this summer, and the four-way pricing war may now be less of an issue with the huge satellite TV integration offering massive potential cost savings for the combined company.
Many on Wall Street think that finally closing the DirecTV deal will remove a lot of lingering questions, especially where the company’s big dividend is concerned. It is a good bet that the synergies created by the deal are being underestimated by Wall Street. And many analysts see upside to wireless margins, which were a positive earnings driver in the second quarter.
ALSO READ: 6 Analyst Stock Picks Called to Rise 50% to 100%
Analysts pointed out that with the close of the DirecTV acquisition, the dividend payout will improve to 70% (from 96% as a standalone figure last year), providing a much more comfortable level for sustainable dividend growth going forward as the company will have a much safer margin for coverage.
Currently AT&T has a dividend that pays out an annualized $1.88, which breaks down to a yield of 5.5%.
As the meeting is approaching, most analysts have been hesitant to change their calls, taking the more prudent approach of hearing what AT&T has to say first before adjusting. At the same time, the calls that come after analyst day should not entirely be trusted. Take them with a grain of salt — the combined company will be something that analysts have not seen before and it may take up to a year for estimates to truly be accurate and in line.
A few recent calls from July on AT&T were:
- Macquarie has an Outperform rating and raised its price target to $39 from $38.
- Canaccord Genuity has a Hold rating and lifted its price target to $35 from $34.
- Goldman Sachs initiated coverage with a Neutral rating and a $37 price target.
Shares of AT&T were up 0.4% at $34.79 Tuesday morning. The stock has a consensus analyst price target of $36.98 and a 52-week trading range of $32.07 to $36.45.
ALSO READ: 5 Defensive High-Yield Dividends Should Withstand the Next Stock Market Correction
Want to Retire Early? Start Here (Sponsor)
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Have questions about retirement or personal finance? Email us at [email protected]!
By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.
By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.