Argus cuts AT&T to Hold as it awaits dividend cut

Jul. 27, 2021 10:49 AM ETAT&T Inc. (T)By: Jason Aycock, SA News Editor52 Comments

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  • AT&T (NYSE:T) is up 0.5% today in a tough tech market despite a move to the sidelines from Argus, which is cutting to Hold on the widely anticipated dividend cut to come with shedding assets.
  • An actual cut isn't official yet, but AT&T is cutting the planned free cash flow for dividends to $8B from nearly $15B last year, and CEO John Stankey has said "you have to resize the dividend when you change the size of the company."
  • And that's clear to Argus as well: "While management has assured investors that AT&T will maintain a dividend in the '95th percentile' of companies, the math just doesn't work after taking the DirecTV and WarnerMedia spinoffs into account."
  • So, it will take a "wait-and-see" approach as the large divestitures play out even while the company pushes a costly 5G network buildout.
  • "On the positive side, we think that AT&T's wireless Mobility business is performing well coming out of the pandemic and that management is right to focus on this business," Argus says, noting that in the longer term, AT&T is still a Buy.

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