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MarketScreener Homepage  >  Equities  >  Nyse  >  AT&T    T

AT&T

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AT&T : Makes New Pitch to Mom-and-Pop Investors

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12/30/2019 | 10:34am EST

By Drew FitzGerald

AT&T Inc., which piled on billions in debt to become a media giant, is getting more creative with its pitch to investors.

The company earlier this month issued a new class of shares that guarantee its holders a dividend worth 5% of the share price but no voting rights. The new securities show AT&T, long known as a haven stock for investors in search of safety, aggressively catering to its base.

"People are looking for yield," AT&T finance chief John Stephens said at a December Wells Fargo investor conference. "If you can guarantee [it]...there's demand for it."

Financing is key to AT&T's future as it digests the $80 billion-plus Time Warner Inc. acquisition. That deal made AT&T the world's most indebted nonfinancial company with a net $180 billion owed.

The company has since whittled tens of billions of dollars off that total and refinanced much of the remainder to take advantage of low interest rates. But the company must also pay its stockholders $15 billion of dividends each year and spend billions more buying back shares over the course of a three-year plan announced earlier this year.

AT&T unveiled the plan after it struck a truce with activist investment fund Elliott Management, which pushed the company to boost its stock price by buying back many outstanding shares. New preferred shares will give the company more cash to help retire common stock and pay down old debt.

The company had no immediate comment on the new equity.

AT&T has continued to raise the dividend payment it makes on common stock, recently upping the annual cash payment by 4 cents to $2.08 a piece. Those shares already give investors an unusually high 5.3% dividend yield, though the ratio could fall if AT&T's stock appreciates, making preferred shares more attractive.

Preferred shares are one of the many tools the communications and entertainment company has used to finance its operations. The company in recent years has also issued bonds denominated in euros and Australian dollars.

AT&T has racked up "a lot of frequent flier miles" over the past two years as its finance executives seek new buyers for its debt and equity, according to Neil Begley, an analyst for credit-rating firm Moody's Investors Service.

He said the strategy helps the company access capital from sources other than big U.S. institutional investment funds.

"They're just trying to take advantage of what's in front of them," Mr. Begley said. "Diversifying sources of capital is particularly important for this company."

Write to Drew FitzGerald at andrew.fitzgerald@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
AT&T -1.43% 35.22 Delayed Quote.-9.88%
WELLS FARGO & COMPANY -3.81% 40.85 Delayed Quote.-21.06%
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Financials (USD)
Sales 2020 182 B
EBIT 2020 31 874 M
Net income 2020 19 375 M
Debt 2020 148 B
Yield 2020 5,93%
P/E ratio 2020 12,9x
P/E ratio 2021 11,7x
EV / Sales2020 2,20x
EV / Sales2021 2,17x
Capitalization 253 B
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Technical analysis trends AT&T
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Income Statement Evolution
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Mean consensus OUTPERFORM
Number of Analysts 32
Average target price 40,07  $
Last Close Price 35,22  $
Spread / Highest target 36,3%
Spread / Average Target 13,8%
Spread / Lowest Target -43,2%
EPS Revisions
Managers
NameTitle
Randall L. Stephenson Chairman & Chief Executive Officer
F. Thaddeus Arroyo CEO-Business Solutions & International
Jennifer van Buskirk Regional President-Northeast
David Christopher President-AT&T Mobility & Entertainment
John T. Stankey President & Chief Operating Officer
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