A T & T US (T-N)

Verizon and AT&T have good yields and reporting better-than-expected earnings. Their businesses have little cyclicality.

Surprisingly is up 24% this year. Telcos are safe in a tough economy; they aren't cyclical and enjoy steady business (i.e. cell phones). Also, they pay pretty good dividends. That said, ATT was a value trap for record decades (high dividend, sinking stock price). But ATT has changed, no longer diversifying away from the phone business, but sticking with it. Last year, they sold their disastrous stake in DirecTV. Meanwhile, the wireless business has gotten less competitive, and so allowing them to raise prices to consumers. Last December's investor day projected 3% annual adjusted EBITDA growth, $18 billion free cash flow in 2027 to be paid in dividends (under 4%) and share buybacks. Their growth target in fibre broadband (they are market leader) is 45 million locations in the US by 2029 (3 million per year); these investments generate higher revenue per user. The buildout is expensive though, but ATT expects margin expansion out of it. The company is confident that Washington will give them tax incentives again. It's no longer a value trap.

It reports Monday. Since Verizon's report didn't stink, he expects AT&T to be fine.

Is up 41% this year. It's doing a great job.

It's often been a trap and they mismanaged the attempted takeover of Time Warner. They are paying off debt and showing signs of grow (i.e. subscriptions). Shares and dividend are okay, but not exciting. He's neutral on this.

A pure play telco, and they've slowly turned around this business. Will benefit from 5G as more businesses adopt to it. They're improving their balance sheet and investing in the right capex, and slowly seeing benefits. The dividend is safe, though he suggest they slow down hikes and instead use more of their cash flow to pay debt or expand their business.

He target $22.84, much higher than now, and it pays a yield of 7.5%, but where's the growth? They blew up their balance sheet (huge) by buying everything in sight like Direct TV. They also made execution mistakes. It looks cheap, but there's no catalyst to go higher. The telcos have take it on the chin, since they're tied to interest rates.

Doesn't like their balance sheet and debt and doubts they can sustain their dividend. Sees a bleak outlook.

It pays 50% of its free cash flow to its 7% dividend. Phone companies could offer the new Apple VR headset as an incentive to switch phone plans. Either way, Apple stock will come out on top.

Shares are down 15%, but pays a 7% dividend yield, with $16 billion free cash flow. Are focusing on their core businesses.

How many more times can they stump their toe? True, he likes that they sold their overpriced assets to drill down to their core. The dividend looks safe and the valuation has fallen. He prefers the Canadian telcos which enjoy an oligopoly. That said, there's little downside in AT&T. Their past mistakes are behind them and not ahead.

The last time, the company told him they wouldn't cut their dividend...then they cut it. So, he doesn't trust them. Consider T-Mobile instead.

Reports Thursday. Likes it as a ballast in his portfolio. Their 5G spending is moderating. Has been unloved for a while, but they will beat earnings this year.