7 Most Undervalued Dividend Stocks to Buy According to Hedge Funds

5. AT&T Inc. (NYSE:T)

Number of Hedge Fund Holders: 80

Forward P/E Ratio as of March 20: 12.36

AT&T Inc. (NYSE:T) ranks fifth on our list of the most undervalued stocks according to hedge funds. The American multinational telecommunications company has steadily grown its wireless and fiber customer base in recent years. While economic challenges could impact demand, the company is focusing on bundling its wireless and fiber services to enhance customer retention. This strategic approach, along with a major transaction completed last year, has generated significant cash flow, allowing AT&T to make progress in lowering its sizable debt. The company’s net financial debt currently stands at over $122 billion, reflecting a nearly 10% reduction from the $136 billion reported less than two years ago.

AT&T Inc. (NYSE:T) remains committed to shareholder returns, supported by a solid cash position. In the latest quarter, operating cash flow totaled $11.9 billion, while free cash flow reached $4.8 billion. The company currently offers a quarterly dividend of $0.2775 per share, with a dividend yield of 4.14% as of March 20.

For the fourth quarter of 2024, AT&T Inc. (NYSE:T) delivered stable growth, with revenue rising 0.6% year-over-year to $32.3 billion. Operating income stood at $5.3 billion, while net income totaled $4.4 billion. The company reported 482,000 net additions in its postpaid phone segment and maintained an industry-leading postpaid phone churn rate of 0.85%. Mobility service revenues increased 3.3% year-over-year to $16.6 billion. In addition, AT&T Fiber gained 307,000 net customers, marking its 20th consecutive quarter with at least 200,000 net additions.