I used to work for AT&T but sold my shares at the beginning of this year. The dividend is great – but the stock has lost a decent amount in the past few years.
Having sometimes worked with the current executives, I know they have some very talented people, but they also have HUGE legacy challenges.
1) Debt. After this latest acquisition of TW they now have $249 billion in debt….let that number sink in. 2) Pension and retiree healthcare costs. Unsure of the current numbers, but five years ago it was already in the multi-billions per year. 3) Increased competition and decreased growth/profit in wireless. The only reason to invest in AT&T for years was wireless growth and profit. This no longer exists thanks to Tmobile competition (former AT&T executive as CEO.) Current AT&T executives were OBSESSED with tmobile, and for good reason. They were scared.
Years of organic growth strategies failed. Digital life among others were all supposed to become billion dollar businesses, but they all failed. Randall Stephenson then had to resort to DirecTV for growth. He bought it at the worst possible time, right as cord cutting was taking off. Now he buys TW right as the media landscape shifts further toward the likes of Netflix and Amazon.
Should be interesting to see what happens – but AT&T is not as safe a stock as it used to be. Their debt alone makes them extremely susceptible to higher risks with higher interest rates.
Disclaimer: Consult your financial professional before making any investment decision.