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AT&T: A Long-Term Disappointment

May 22, 2023 11:40 AM ETAT&T Inc. (T)105 Comments
Aaron Goldberg profile picture
Aaron Goldberg


  • AT&T’s earnings from their continuing operations have been flat for 10 years.
  • Although they pay a healthy dividend, the company isn’t growing.
  • Growth in the Wireless and Fiber businesses is being offset by a terminal decline of their legacy wireline (copper) and video businesses.
  • The purchase of DirecTV for $67B in 2015 and the subsequent separation of that business into a partnership was and is a slow-moving train-wreck.

Freight Train accident with Twilight.

teppakorn tongboonto/iStock via Getty Images

Although the recent sell-off in AT&T (NYSE:T) may have been unjustified, a long-term analysis of their continuing operations reveals a company that has done little else for the common equity owner other than pay a

This article was written by

Aaron Goldberg profile picture
I have over 30 years of personal investing experience. My articles cover mostly small to mid sized midstream companies and larger topics like the energy transition and macro questions, like when will we hit peak shale? I consider myself a value investor and recommend companies that produce high returns over a 3-8 year time horizon. As value returns to other sectors, I will broaden my articles to include other names.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of T either through stock ownership, options, or other derivatives. 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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Comments (105)

I guess there’s two main investors here. People who got burned in the past and new investors who are just seeing the dividend. Looks safe to me. Even if there’s just 2 to 3% growth in market cap. It’s a great overall return. I think market cap it will be growing by more like 5% based on that debt paydown and stock repurchasing projections.
Leo50 profile picture
When I started work with AT&T, SBC back then, in 2000, the stock price was around $50. Some guy with the name Witticker was the CEO. By the time I left at the end of 2008, Stankey was the CIO. Stock prices were down to around $30s. They had a spin off and high dividends but still south bound.
Paper_stax profile picture
I sold this garbage last week before it breached $16. I bought T in 2015. I even sold the WBD spinoff and put the proceeds back into T near the 2022 lows. After dividends reinvested, I was still down at selling. Just a big waste of time.
?. Bought high sold low. At least wait until it goes to 20 when fed does not raise rate.
@Leodavinci It may be a while before it hits 20. At the rate T is going, it may go below 15 next week. I feel your pain. I am down 32% on T. And I am down 62% on WBD I received on the split. At least I am getting a dividend on T while I wait for it to go up. Could be years.
@Heada last time it went to 15 it was at 19 within a month and over 20 within three months. Buy it at 15. The robots will kick in and buy when the Fed rate stops raising rstes and really kick in when the Fed rate starts to go down. The stock is bought on an algorithmic basis by robots in large income portfolios. Based on what the fed rate is.
ZarceroCR profile picture
Randall Stephenson; the Jack Welch of AT&T while Stankey is the Jeff Immelt

Shareholders are the widows and orphans
@ZarceroCR Funny - I was out walking with my wife this afternoon and I made a comparison between T and GE.
Paper_stax profile picture
@ZarceroCR that's heavy
Paper_stax profile picture
@RoHughes59 the two stocks I sold practically at break even including dividends.
I'll save everyone the time, and money. If you buy... make sure u wait until after it hits 52 week low.. that is going to be exceeded guaranteed
Throwing Ketchup profile picture
@D M X And yet, that would have been poor advice for the last ten years as it goes lower and lower and lower and lo...
sourdo profile picture
@Throwing Ketchup actual it is good advice. It is a simple maneuver that many can't figure out.

That is this, "Buy lower, sell higher, rinse and repeat". T is not a stock to go long on, but an excellent stock to trade. The only people who get burned here are the ones that subscribe to the "buy and hold forever" theory. I have done this with T over and over and over, and I always have come out on top. NO other stock trades like T. Yes you can time stocks and make money.

There are much better dividend paying stocks out there without all the drama. See Business Development Companies.

@D M X has the right idea. I had a buy order for $15, and caught some yesterday. I waited, I was either going to get in cheap, or not at all.

If you're long on T and underwater, remember, selling for a loss, well, just don't do it, wait it out. And the next time it hits $20, you'll know what to do, sell it.
@sourdo so the 52 week low is $14.05 or -$1.73 from where it sits presently. That's a lot of pain to endure as it falls.
Att is by far the most regrettable investment of my life. Not particularly close. The worst dip to buy
sourdo profile picture
@sixthspeed I'll buy your shares
@sourdo Do you think T will go down under $12?
sourdo profile picture
@Vince Gowda

Unlikely to see >$12, but with all the geopolitical events going on, a market wide "crash" could happen dragging everything down, as it is happening right now. This has happened many times in my 25 years of being a DIY stock trader/investor. And when I learned to act during those events, I can make a quick buck.

I watch the dividend yield, when it goes above 7%, the buyers will step in, like myself. It is the heeby jeeby T bag holders that panic, and drive the price down. It is like a self fulfilling prophecy, people hate T, but still own it, and let FOMO keep them from letting go and take the profit, and instead sell for steep losses. You can always buy back a stock if you like the company. Well behind every sale is a buyer, and I am that guy.

I also think in time, T will go up. This is a good time to buy into T. After all, it is the phone company, or one of them, AT&T will be around for some time.

Good luck to all here.
As long as AT&T keeps buying back shares and paying down debt, it will be fine. Assuming management doesn’t make some stupid purchase. Share price will increase incrementally to correspond with share buy backs and debt pay down. When the Fed eventually reduces rates, investors looking for income will buy AT&T until the price per share rises to the point where it’s dividend hits its five year average. So price per share will not really go up and stay up until the Fed decreases rates. So don’t sweat it. Just keep reinvesting dividends.
VoiceofSanitySometimes profile picture

Buy backs don't make the stock price go up. The benefit from compressing earnings into fewer shares is offset by the hit to the balance sheet (lower cash and / or more debt).

The benefit of buybacks is that if the stock outperforms the expectations built into the stock price at the buy back, that "outperformance" is spread across fewer shares. But remember that if the stock underperforms those same expectations, that is also spread across fewer shares.

There are a small # of companies that have done a great job with buybacks, most notably Apple and BRK. For many companies who buy back shares at heightened stock levels, buy backs have proven to be a negative for shareholders. Also remember that lots of corporate buybacks don't lower the # of shares, they buy them back to distribute them as stock-based compensation.
@VoiceofSanitySometimes Buybacks make EPS look better.

But how many shares do they add based on stock comp? Net....it might be flat.

But yes, reality is, buybacks don't work.
VoiceofSanitySometimes profile picture

Speaking of buybacks, this from CNBC today


House Dems trying to end open-market corporate stock buybacks.

Very curious about why the "open-market" adjective. That's a loophole you could drive a truck through. Lots of current buybacks are private sales -- they get an I Bank to buy up large #s of shares, and then the company buys it from the I Bank plus a small premium. It is actually worse for shareholders, because the company often ends up paying slightly above market price.

I'm not big on the govt getting in the middle of this, because they don't have a clue what they are doing and will likely do more damage than good. But if I were looking for a government rule for buybacks, it would be something like:
1) Max you can spend on buybacks in a year is 75% (?) of FCF from the prior year
2) You have to do buybacks from cash, not debt
T was a great source of fees for Wall Street. The Street in turn provided a walk down a one way street. Buy at $14-15; sell at $19-20. Maybe collect a dividend or two
sourdo profile picture

Since 2017, I've round robined T many times with great effect. I put in a buy order yesterday @$15, and caught 100 shares. So predictable.....
Mscape profile picture
Wait for the disruption to service and operation of T when RTO is implemented, It will be significant
NVDA and At&T are working together... GOOD news.
@Vince Gowda not enough to offset DISH
sourdo profile picture
I recall the Direct TV online deal AT&T was selling years ago. I tried the 2 week trial, it was mostly unwatchable, a total mess of epic proportions.

And all the rest too, Time Warner, etc, on and on and on.

But even T has value at a point, and that point for me is <$15, where I may pounce one more time for the trade. And if it don't, oh well.

I own WBD, and still think it will do well, just because it's no longer part of AT&T. T should just stick to phones and data, period.

Good trading all
The management of T is and has been terrible. The legacy business throws off tons of cash. But making $35+++ billion dollar investments that are pure losers continue to hurt earnings.

Funny that the legacy business is so great that the management can continue to make foolish mistakes.

The rumors are or have been that some link up with DISH is possible, but then again why would T further dig itself into more debt in an area of declining metrics.

DISH may have spectrums for sale, but no one can put a solid price on the value of this illiquid asset.
AT&T's common stock is essentially a bond that paid a relatively high coupon rate of 7.5% over the previous 10 years.

The big difference is at maturity, at least with a bond I get my principle back. I been tracking T since the high 30s and now below 20. Yes the delusional T investors keep talking about the great dividend but never mentioned how their principle has be destroyed. Stanky led acquisition of DirecTV and Time Warner. Now as head of T why would he do a better job of running T?
@bill9351 and they can't cut an interest payment like they can a dividend.
VoiceofSanitySometimes profile picture
You hit on an important point in this article that so many investors miss -- how much of capex is sustaining and not for growth.

People see big capex #s and think "if that has a 10% ROI, cash flow is going to skyrocket". But it never materializes because it is sustaining capex and not growth capex, so the net ROI is zero.

Lots of companies other than T have this same issue, but it is particularly pronounced in this industry because of the huge $s involved.
richjoy403 profile picture
@Aaron Goldberg -- Agreed, and last March 31st, the last of my $T lot's LSO was executed.

T appears to be well on its way to being a test for those who've no interest in share price gain, because their interest is only in dividend income (and thus, they welcome lower prices as an opportunity to obtain a higher yield).

IMO, there's increasing risk is that T becomes a widely recognized yield trap.

@richjoy403 we are at the end of the bell curve . our stake has been held for 35 years, we are back to my parent's basis. never sold because they didn't want the gains. the dividends are a leader in the portfolio so we are in this trap. it may now be a wasting asset but was good over the long haul.
richjoy403 profile picture
"our stake has been held for 35 years, we are back to my parent's basis.... it may now be a wasting asset but was good over the long haul. "

@Tomassino V. Walker -- MOST STRONGLY DISAGREE!

IMO, though $T may've been a good investment in the 1st 2 or 2.5 decades if that 35 yr position was initiated in 1988 or '89, a period leading to the growth of cell networks & smartphonesphones.

Nonetheless, T's since been a deteriorating asset as management has destroyed capital. T should have been replaced with a better opportunity (failure to do so means you've suffered 'opportunity costs' (i.e., losses). *

Clearly, on both 'real return' (post-inflation) and 'risk-adjusted' bases, your last decade's performance is not 'a good long-haul record'.

Furthermore, considering only to T's total return--thru TODAY's close, its 10-yr TR is a miserable 0.4% CAGR (per Morningstar).
* T's an excellent example of the dangers inherent in Buy & hold Forever--perhaps a suitable strategy for long-dated Treasuries or FDIC-insured savings, but not suitable to the risk-profile of equities.
Paper_stax profile picture
@richjoy403 spot on assessment
The telecom companies are raising prices, good sign of monetization.

Guiding for 16 billion fcf with under 120 billion mcap is great.

Long term bet on fiber is also great.

Lowering capex next year is also great for future cash flows.

Delevrageging is also great for free cash flow generation.

But yeah, I get rear view mirror investors feel bad over past performance.
@linkzter Thank you for posting what the author misses big time.
Add reduced proportion of revenue of wired services.
ATT is like my boat. I was excited when I bought it and more excited when I finally got rid of it.
@rusty0601 Many people say that about owning a boat.. we have had one for 15 years .. one of the best family investments we have ever made.. countless memories! As for T it is painful to own.. my cost is below $18 so I just hope one day they get it together!
The people who wrote this obviously know nothing of dividend stock income investing and it’s importance in sending you into early retirement. The safe dividend earned here is nearly twice that of our benchmark of the 10 year treasury. In retrospect let’s review what independent analysts at value line with no skin in the game tell us when they wrote on 5/11/23 investors with an eye for income may want to take a look here. The 6.5% dividend is well above average and we believe they will hit their cash flow guidance of 16b and though the shares will be volatile for those who can handle the volatility should experience solid recovery potential out to 2026-2028. Now I know a lot of the investors who follow seeking alpha think they can get rich by investing in Aunt Cathy Woods ARKK funds and investing in overpriced tech leaders. You forgot Ben Grahams advice “There is no easy money made on Wall Street or anywhere else”. Gaining wealth in investing is like Warren Buffett explained climbing a long hill. Start very young or live very old. I’ve done both and happily stuck with my dividend achievers through thick and thin as was taught to me by senior experienced investors for decades. Their is no get rich quick alternative to buying income producing equity’s who raise their dividends to keep up with inflation (and I think T will start raising soon as they have the cash flow to do so). So buy this gem and collect your cash dividend and enjoy a future modest capital gain.
Paper_stax profile picture
@Always Bullish excellent comment
@Always Bullish Nobody wants to get rich slow.. one of my favorite Buffett quotes. Long T since the spin off.. so my cost is a little over $1700.. i really bought it as you suggest for the dividend.. and reinvesting the shares.. one day to turn the income on and enjoy retirement!
@Valuestocks007 your thinking right brother
Very provocative and well thought out article depicting the reasoning as to why this company has floundered over the past 10+ years. With legacy eroding any meaningful gains in fiber and post subscriptions T has no more ammunition left to turn this ship around. $20 might be painful for some of us but rationally I don’t see the stock moving much higher nor the dividend increasing
I have wanted out for a while... missed an exit just before WB spinoff.... now hoping for a big enough bounce to at least sell and break even.
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