It has been quite obvious that corporations buying back billions of dollars worth of their own stock have helped to support and prop up equity prices in recent years. Now that 2018 is winding down and 2019 comes into focus, there is starting to be a growing concern about all the debt that is maturing from the low-rate era that had been in place under quantitative easing. This is where companies may have to decide to pay down debt rather than simply issuing more bonds at higher interest rates.

If companies find themselves in a place where they have to use cash to retire debt rather than buying back billions of dollars worth of stock or increasing their dividends, how will the investment community feel about those companies? 24/7 Wall St. recently reviewed many of the Dow Jones industrial average stocks to decide which companies may and may not have to worry about the debt maturities from 2019 to 2022.

AT&T Inc. (NYSE: T) is no longer a member of the Dow Jones industrial average, but with major acquisitions having been made, it has a very large debt burden now at the same time that it has a sky-high dividend yield. Investors and analysts alike begin to have a harder time forecasting investing models when companies are rapidly adding or shedding assets. AT&T is a very different company than it was just five years ago, and it has been making some smaller sales as well.

The good news is that AT&T shareholders probably do not need to worry about the mountain of debt hurting its common dividend for the time being. After all, AT&T generates billions of dollars in cash flow. That said, Thomson Reuters shows that AT&T also has $142 billion in current outstanding debt maturities on its books outside of credit lines and other shorter-term debt. And almost $36 billion of that debt is coming due during the years of 2019 through 2022.

What happens if the odds of a recession after 2019 start growing? Investors likely would then start demanding higher rates for leveraged companies to borrow — at the same time that future earnings power may be at risk.

While AT&T has acquired Time Warner, investors also have to consider that in recent years AT&T acquired DirecTV as well. Its long-term debt was roughly $69 billion at the end of 2013 — but it was up to $126 billion by the end of 2017.

After years of hiking its dividend coinciding with a falling stock price, AT&T now has a common stock dividend yield of better than 6.5%. That is unheard of for a company worth $220 billion in market capitalization. The good news is that Thomson Reuters still sees the dividend increasing by roughly 2% in its payout in each of the next three years. And AT&T’s consensus estimate of $3.52 in earnings per share easily covers the current dividend.

Where things might get dicey for AT&T having to decide among capital allocations for shareholders and debtholders alike is in the coming years if interest rates continue to rise and if corporations are given more scrutiny on their ratings. S&P rates AT&T as BBB for both the long-term issuer rating and the senior unsecured rating. Moody’s equivalent rating for AT&T is Baa2.

Thomson Reuters sees AT&T’s shares outstanding rising to about 6.95 billion by the end of 2018 and then to over 7.3 billion shares in 2019 and beyond. With roughly a $2.00 per share dividend, that comes to an expected dividend obligation of almost $13 billion this year and over $14.6 billion in each 2019 and 2020, without even considering future dividend hikes.

According to Nomura/Instinet, AT&T’s free cash flow yield is now about 12%, and it should exit 2018 with a free cash flow run rate above $25 billion, rising to roughly $30 billion by 2020. The firm’s view is that this free cash flow should easily cover debt maturities of $12 billion per year and allow for expected dividend increases. The firm also noted that AT&T’s assets of $500 billion or so should also act as a cushion. And Nomura/Instinet issued a view ahead of its coming analyst day:

Leverage goals remain on track driven by FCF and possibly asset sales AT&T expects to exit 2018 with a net leverage of 2.9x. We expect AT&T to reiterate its goal of reaching 2.5x net leverage by the end of 2019 and then returning to historical levels by year-end 2022. While AT&T views free cash flow as the primary way of achieving these leverage targets, it also has the ability to monetize its asset portfolio as an additional way to reduce its debt load. For example, AT&T could monetize its Latin American video assets, its 10% stake in Hulu, and of course its vast real estate portfolio. About 90% of AT&T’s market debt is fixed rate, which protects it from a rise in interest rates. Moreover, AT&T’s average annual debt maturity for the next four years is approximately $12bn, well within the free cash flow less dividend range. AT&T’s dividend is $14bn per year. As of 3Q, AT&T’s net leverage was 2.85x.

Again, AT&T is a far different company than when it was merely a defensive telecom giant with a high dividend payout. Now it is DirecTV, AT&T, AT&T Wireless and Time Warner all wrapped into one shell. After revenues of $160 billion or more in 2017 and 2016, its revenues are expected to be $185 billion by the end of 2019. Its EBITDA is expected to reach $60 billion by the end of 2019 as well.

AT&T shares closed at $30.45 on Tuesday, in a 52-week range of $28.85 to $39.33. Its consensus analyst target price from Thomson Reuters is $34.36.

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