AT&T Stock: Here Are 4 Reasons It’s a Strong Buy

Posted On December 18, 2017 2:11 pm

AT&T Inc.(NYSE:T) investors are on tenterhooks as US authorities are set to announce their final verdict on the company’s $85 billion buyout of Time Warner. The Department of Justice recently sued AT&T to block the company’s proposed merger with Time Warner. But Analysts think that AT&T’s excellent lobbying will result in a merger success. Last month, AT&T proposed a seven-year ban on programming blackouts to distributors of some Time Warner content. AT&T CEO Randall Stephenson thinks that these steps show the company’s willingness to remove any kind of anti-competitiveness from the merger. We believe that even if the authorities reject AT&T and Time Warner merger, AT&T stock is still a great buy.

AT&T’s fundamentals remain strong. The company is paying a dividend yield of over 5.4%. This healthy dividend yield makes the stock a great investment option for income investors. AT&T’s cash flow is improving, which shows that the dividend is safe. AT&T cash flow so far this year stands at $12.8 billion. For full year, AT&T expects to rake in total cash flow of $18.0 billion.

AT&T recently revealed at the UBS Global Media and Communications Conference that DirecTV over-the-top service customers count has crossed 1 million. DirecTV OTT service was launched back in November 2016. Video remains the biggest strength of AT&T. AT&T is also on track to achieve $2.5 billion or more in annualized cost synergies from the DIRECTV by 2018. All of this data shows that AT&T’s acquisition of DirecTV was an excellent decision. The company will keep acquiring other entities in the media and telecom industry in the future, providing more growth catalysts for AT&T stock.

Analysts also believe that AT&T could bid to acquire Netflix. The company could tap into the massive customer base of Netflix and offset its declining cable business. AT&T also plans to expand its internet penetration in the country. AT&T management recently revealed the company’s plan to invest a whopping $1 billion in fiber networks. AT&T is planning to expand FirstNet network. Earlier this year, the company won a 25-year contract from the First Responder Network Authority (FirstNet) for a massive broadband network for first responders, police officers, firefighters, and emergency medical services.

AT&T stock would greatly benefit from the upcoming tax relaxations from the US government. AT&T is currently paying a corporate tax of 37.21%. This tax will be slashed to about 20% next year.

 Related: Oracle will Soon Dominate Cloud. Here’s What You Need to Know

Tagged with:

About author