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AT&T's Big Media Nightmare Scenario

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AT&T's Big Media Nightmare Scenario
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Many investors love AT&T Inc. (NYSE: T)'s stock, not because of its business model or growth strategy, but rather because it offers an attractive 5 percent dividend yield, a history of increasing its dividends and little volatility in its stock price.

Gadfly's Michael Regan further described AT&T is a "widow and orphan" stock, because it is ideal for investors who want a steady stream of "worry-free income." In addition, AT&T's stock is also ranked as the top holdings in many ETFs that focus on high paying dividend stocks or low volatility and even momentum-chasing.

In fact, AT&T's stock has been a top performer this year, but the stock sank more than six percent in the three trading sessions since the company announced its plans to acquire Time Warner Inc (NYSE: TWX).

For some stocks, a 6 percent decline over three days may be troubling but not necessarily reason enough to sound the alarm bells. However, for a $226 billion market-cap giant like AT&T, the move marks its worst three-day performance since January 2009 and cut its year-to-date gains in half.

Needless to say, investors are concerned what will happen to their beloved dividend paying stock. Questions arise, such as whether AT&T's stock will still rank as a top holding in dividend focused ETFs and whether the stock will also be a large holding in telecom focused funds.

These are all legitimate questions that have yet to be answered. In the meantime, any deal is certainly to be approved or rejected after the coming U.S. election.

Donald Trump already made it clear his administration wouldn't allow AT&T to acquire Time Warner. Hillary Clinton's stance is less direct but spokesman Brian Fallon did say she "certainly thinks regulators should look at it."

Latest Ratings for T

DateFirmActionFromTo
Nov 2017CitigroupMaintainsBuy
Nov 2017Standpoint ResearchInitiates Coverage OnBuy
Oct 2017Deutsche BankMaintainsHold

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