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The Big Elephant In The Room For AT&T And 3 Things To Watch Out For In 2019

Dec. 03, 2018 3:00 PM ETAT&T Inc. (T)AMZN, DIS, NFLX, VZ79 Comments
Stefan Redlich profile picture
Stefan Redlich


  • We will see cash flow rising to new heights.
  • We will see significant debt reduction.
  • We will see a new AT&T with an all-new streaming service as it directly fights with Netflix and others.

2018, although it is not yet over, has been a dismal year for AT&T (NYSE:T) investors. While the dividends kept rolling in like clockwork, the rest of the business performed nothing close to Swiss clockwork, and as a result, the stock tanked up to 25% before making up some lost ground at the end of November.

Source: arstechnica.com, all image courtesy remains

This has pushed the yield to levels we haven't seen since the Great Recession and the current yield of 6.4% is by far the highest of any dividend aristocrat.

ChartT Dividend Yield (TTM) data by YCharts

It is also substantially above that of its main rival Verizon (VZ) which, by the way, has had a great year.

ChartT data by YCharts

Markets are always looking towards the future, and now that AT&T has given a first glimpse on what it expects for 2019, it is the perfect time to review that guidance, challenge it and put emphasis on three things investors should look out for in 2019. I have a very strong interest in AT&T's stock as it is my largest holding both in terms of cost basis and in terms of dividend income, and as such, it is vital to constantly review and reconsider this investment. Without further ado, here are three things that will shape AT&T's 2019.

1) We will see Cash Flow rising to new heights

For 2019, management is expecting to generate $26B in free cash flow, up from around $21B in 2018 and significantly higher than my conservative estimate of $23.9B I used for an in-depth analysis of AT&T's debt profile and its ability to service that giant pile of debt - but more on that later. Dividends in 2019, factoring in the usual $0.04 per share increase to be announced in December, are expected to amount to

This article was written by

Stefan Redlich profile picture
I am working as a Business Analyst and Data Engineer in Germany and have started to build up a portfolio focused on Dividend Growth, both on the high and low-end yield spectrum. Primary focus is on Blue Chips with long-reaching dividend track records. I have been investing for 2 years and have been standing on the sidelines for way too long before. I love developing spreadsheets in Google and Excel to analyze financial performance and integrate these two sources with each other!Happy to connect on the various channels!

Analyst’s Disclosure: I am/we are long T, AMZN, VZ, DIS. 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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