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

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.

Key Insights

• 🙃 AT&T plans to spin off WarnerMedia and merge 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 each AT&T share owned.
• 🥶 The transaction will be tax-free for shareholders.
• 🙃 The fair value of AT&T stock is estimated to be $28 per share, with potential upside from the current trading price of $23 per share.
• 😇 The cash dividend offered by AT&T is around 28 cents per share, resulting in a dividend yield of 4-5%.
• 😘 The dividend yield may appear lower after the stock dividend and stock price drop during the spin-off.
• 👨‍💼 AT&T's debt will likely be reduced due to the allocation of $40 billion to the WarnerMedia business.

Transcript

hi i'm jimmy in this video we're looking at the att spin-off of their warner media business and is att stock worth investing in today we're going to look quickly at some of the terms that have recently come out for their spin-off as well as the t dividend and ultimately the fair value of att stock to see if a t is worth investing in today now a t i... Read More

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.