AT&T (NYSE: T) is part of a cellphone oligopoly in the United States. Essentially, the telecom giant and its main competitors dominate the sector, making it difficult for a newcomer to break in. However, that hasn't stopped companies from trying, including cable operators offering bundled services and, perhaps, even **** e Exploration Corporation's (NASDAQ: SPCX) Starlink. Here's how investors should view AT&T's ability to maintain its well-above-market 4.4% dividend yield as more companies try to break into the lucrative cellphone market.
The first thing to consider when looking at AT&T's business is the competitive landscape. It has always been intense, as the members of the cellphone oligopoly fight tooth and nail for market share. There's a good reason for that, however: customer revenues tend to be annuity-like. That provides a solid foundation for paying the dividend. And while the involvement of cable companies and **** eX increases competition, AT&T should be able to hold its own as a business.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
That big picture view of the situation, however, doesn't mean it will be able to continue paying its dividend at the current level. Most investors **** sing dividend support will look to the payout ratio to determine whether the company can continue paying nearly $2 billion in dividends each quarter. The 36% trailing 12-month payout ratio suggests the answer is yes.
But that $2 billion in dividends number came from the cash flow statement, not the income statement, where earnings live. This is because earnings aren't what pay the dividend; cash flow is. When you compare the dividend to cash flow, using the cash dividend payout ratio, you get a slightly lower coverage rate of 45%. That, however, still looks like ample coverage.
#NVIDIA
The first thing to consider when looking at AT&T's business is the competitive landscape. It has always been intense, as the members of the cellphone oligopoly fight tooth and nail for market share. There's a good reason for that, however: customer revenues tend to be annuity-like. That provides a solid foundation for paying the dividend. And while the involvement of cable companies and **** eX increases competition, AT&T should be able to hold its own as a business.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
That big picture view of the situation, however, doesn't mean it will be able to continue paying its dividend at the current level. Most investors **** sing dividend support will look to the payout ratio to determine whether the company can continue paying nearly $2 billion in dividends each quarter. The 36% trailing 12-month payout ratio suggests the answer is yes.
But that $2 billion in dividends number came from the cash flow statement, not the income statement, where earnings live. This is because earnings aren't what pay the dividend; cash flow is. When you compare the dividend to cash flow, using the cash dividend payout ratio, you get a slightly lower coverage rate of 45%. That, however, still looks like ample coverage.
#NVIDIA
3 months ago
