AT&T Stock Analysis - Stock Dividend & Cash Dividend Update | Summary and Q&A

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March 29, 2022
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Learn to Invest - Investors Grow
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AT&T Stock Analysis - Stock Dividend & Cash Dividend Update

TL;DR

AT&T is planning to spin off its WarnerMedia business and merge it with Discovery, resulting in value for shareholders. The company also offers a cash dividend and has a fair value of $28 per share.

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Questions & Answers

Q: What is the fair value of AT&T stock and its potential for upside?

Using a discounted cash flow calculator, a fair value of $28 per share is estimated, indicating potential upside as the stock is currently trading around $23 per share.

Q: Can investors opt to sell their shares of AT&T or the WarnerMedia business during the transition period?

Yes, investors can choose to sell either their AT&T shares, WarnerMedia shares, or both during the transition period. However, they need to be careful and pay attention to the ticker assigned to each stock.

Q: What is the cash dividend offered by AT&T?

AT&T recently announced a cash dividend of 28 cents per share, resulting in an annual dividend yield of around 4-5%. However, the dividend yield will be lower after the stock dividend and stock price drop during the spin-off.

Q: Is AT&T a good long-term investment?

The analysis suggests that AT&T is a worthwhile investment. The spin-off and merger offer potential value for shareholders, and the company's moves towards a slimmer, focused business are positive. Despite substantial debt, the stock is viewed favorably by the analyst.

Summary & Key Takeaways

  • AT&T is spinning off its WarnerMedia business and merging it with Discovery, with AT&T shareholders owning 71% of the new company.

  • Shareholders will receive a stock dividend of 0.24 shares of Discovery for every AT&T share owned.

  • The transaction is tax-free and provides investors with the opportunity to either sell their shares or retain both AT&T and Discovery shares.

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