Prepared by Tara, Senior Analyst at BAD BEAT Investing
It is catalyst week for AT&T (NYSE:T). We have been anxiously awaiting this week. While the company continues its normal operations, perhaps, the most notable developments are the 5G rollout, and the performance (or lack thereof) of its new HBO MAX streaming service. We know that the Time Warner purchase (now WarnerMedia) was a big win, though the box office is all but shut down, and movie releases are on delay. There have been slowdown concerns with phone upgrades and data plans, thanks to an economic slowdown thanks to COVID-19. That is something to watch. But all of this is short-term news, both good and bad. What matters with AT&T, in our opinion, is the ability to pay the bountiful dividend. Sure, it may offer some capital appreciation from here if things go well, but most investors are in this for stable income, and that is how we want to play it. With that said, the stock will move this week because earnings are set to be reported. We are positioning for a bounce frankly and think shares are a strong buy in the high $20s. If the market gives us the chance, we will buy more at $26-27, so long as the dividend looks secure. As of now, it does, but there is one metric to watch for next week above all others.
Operational cash results will likely decline, and this will set the tone for dividend coverage potential
Let us be quite clear here. AT&T has definitely been pressured across multiple business lines thanks to COVID-19. As we have said before, and will likely see after earnings, H1 2020 is seeing pressure, thanks to revenue declines. Revenue will be pressured in the report. It is not all bad news.
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