6. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders: 59
Dividend Yield as of January 20: 4.98%
AT&T Inc. (NYSE:T) is an American telecommunications, media, and technology services company that provides a wide range of services to its consumers. Over the past few years, the company has consistently increased its wireless and fiber internet subscriber base. Between the end of September 2022 and September 2024, the company expanded its total wireless customer base by approximately 7.5 million subscribers. Moreover, it gained over two million fiber subscribers during this period, which helped counterbalance the declining demand for traditional wireline services.
In the past 12 months, AT&T Inc. (NYSE:T) has surged by nearly 33%, due to improving fundamentals such as higher gross margins and reduced debt levels. In addition, at the end of Q3 2024, the company announced the sale of its remaining 70% stake in DirecTV to private equity firm TPG, which will generate significant cash to help reduce debt and return value to shareholders. With its strong balance sheet, rising share price, and high dividend yield, the company presents an appealing option for income seekers.
TCW Funds stated the following about AT&T Inc. (NYSE:T) in its Q3 2024 investor letter:
“AT&T Inc. (NYSE:T), based in Dallas, TX, is a nationwide provider of voice, video, and data communications services to businesses and consumers in the wired, wireless, and broadband. At initiation, the stock had a $141 billion market capitalization and met all five valuation factors with an above market dividend yield of 5.6%. From a sustainability prism, the company completed its commitment to invest $2 billion by the end of 2023 to help bridge the digital divide. AT&T is working on enabling low-income households to access to low-cost broadband services through its Access service plan as well as reaching out to more rural communities and Tribal lands where internet access remains a challenge. It is nearly 85% the way to providing one million people in need with digital resources through AT&T Connected Learning® with the goal to be reached by the end of 2025. In 2020, the company announced that it is committed to be carbon neutral by 2035 with zero carbon emission across all operations. It is deploying Smart Climate Solutions – through efforts like its Connected Climate Initiative – that will help enable its business customers to reduce their emissions as well. The company’s goal is to help collectively reduce its emissions by one billion metric tons – a gigaton – by 2035, compared to 2018 levels. The primary catalysts are new/strong management and restructuring. John Stankey was appointed CEO in July 2020 and he is committed to refocusing the company and improving its financial performance. The company combined its WarnerMedia operation with Discovery during 1Q:22 which eliminated AT&T’s exposure to the rapidly evolving media industry and refocused its core telecommunication business thus eliminating a major drag on profitability and the company’s balance sheet by reducing long-term debt from a peak $176 billion during 2020 to $142 billion at the end of June 2024 quarter. AT&T is moving aggressively to reduce cost and sell non-core assets such as its advertising platform Xander to Microsoft† which was accomplished during 2022. The company has redesigned its network to be software driven structure reducing the capital investment cycle in its national network – resulting in a network that is flexible with unrivaled speed and reliability – thus enhancing its nationwide position. By the end of 2023, it expanded its 5G network to reach more than 302 million people in nearly 24,500 cities and towns in the U.S. The company’s mid-band 5G+ network alone grew to cover more than 210 million people. AT&T is one of the largest investors in digital infrastructure in the U.S. Over the five years ending 2023, the company invested nearly $150 billion primarily in its wireless, fiber optics, and wireline networks. The extensive restructuring and refocusing of AT&T on its core business should result in improved earnings and cash flow while at the same time reducing uncertainty for shareholders.”
AT&T Inc. (NYSE:T) plans to distribute over $40 billion to its shareholders via dividends and share buybacks within the next three years. In the most recent quarter, the company reported an operating cash flow of $10.2 billion and its free cash flow came in at $5.1 billion. The company’s quarterly dividend comes in at $0.2775 per share and supports a dividend yield of 4.98%, as of January 20.
As of the end of Q3 2024, 59 hedge funds in Insider Monkey’s database owned stakes in AT&T Inc. (NYSE:T), worth more than $5.6 billion in total. Arrowstreet Capital was the company’s leading stakeholder in Q3.
