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AT&T: Substantial Total Return Opportunity Squarely On The Table

Jul. 06, 2017 8:00 AM ETAT&T Inc. (T)C, VZ94 Comments


  • AT&T is down over 10% year-to-date and is trading just 5% off its 52 week lows.
  • There is good reason for the selloff based on a number of negative headwinds at present.
  • Nonetheless, I say this is the exact time investors should be buying, not selling.
  • In the following piece we make the case a substantial total return opportunity is onthe table for savvy dividend growth and income investors.

AT&T (NYSE: NYSE:T) shares are down over 10% year-to-date and trading just 5% off their 52 week lows. Several negative headwinds and factors can be seen as the culprits for the selloff. The following are a few of the bearish catalysts.

Fierce competitive environment threatens profits

We just saw the first of what could be many top-line misses based on the fiercely competitive wireless market. This coupled with the fact AT&T is in the midst of major capital expenditures regarding its vast fifth generation network expansion efforts leaves little room for error.

What's more, it appears Verizon (NYSE:VZ) is not going so "quietly into the night" as it was believed. It seems Verizon has its designs on Disney (NYSE: DIS). So, even though AT&T is leading the competition regarding becoming the world’s premier Technology, Media, and Telecom (TMT) provider, it is in no way a lock. The company needs to keep executing to turn the stock around.

Debt level threatens dividend

In the company's 10-K, AT&T lists access to capital markets as a primary risk factor. The company states:

"Adverse economic and/or capital access changes in the markets served by us or in countries in which we have significant investments, including the impact on customer demand and our ability and our suppliers' ability to access financial markets at favorable rates and terms."

I consider this the biggest risk at present for the company based on the massive debt load. Moody's has given a Baa rating to new notes from AT&T, yet stated it's keeping the company ratings on review for downgrade. What's more, Moody's recently lowered its outlook on the entire telecom sector to negative from stable. On top of this, Moody's had already put AT&T on downgrade review in October after the company announced its $85 billion deal for Time Warner (NYSE:

This article was written by

David Alton Clark profile picture
The #1 Service for Income Coupled With Growth Targeting 20% Total Return
I have been a Seeking Alpha Contributor for over a decade. I became a CNBC Contributor in 2015 for having the #1 track record according to stock pick returns. I was also featured in BARRON'S for being the Top Performing Financial Expert according to TipRanks from 2010-15. In 2020, I was named "Blogger of the Decade" on Yahoo Finance for having the best stock picking track record from 2010 to 2020. In addition, I am a currently a licensed REALTOR® in the state of Texas, a former FINRA registered OIl & Gas securities representative, banking industry executive with Citibank, and auditor with EY, a major accounting firm. I received my BBA in Accounting (With Honors) from the University of Texas - San Antonio. 

I am a self-made man and started out my career in the US Army's 10th Mountain Division as a Mountain Infantryman. I am a member of the DAV and a Disabled Veteran. I  have managed my own portfolio for the past 30 years. This includes successfully navigating the 2000 and 2008 bubbles, so I completely understand the full cycle the market can take. People who know me in investing circles call me the "Bubble Surfer" for my ability to preserve capital during times of duress. My professional background has provided me with an intimate knowledge of corporate financial statements and how companies actually make money. This expertise and wisdom is the value I wish to share with you. Here is a profile of me featured in the Globe and Mail detailing my career.

DISCLAIMER: David Alton Clark is not a Registered Investment Advisor or Financial Planner. The Information in his articles and his comments on SeekingAlpha.com or elsewhere to be used as a starting point for your own due diligence. Do your own research and always consult a registered investment Advisor.

Analyst’s Disclosure: I am/we are long T. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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