A&T Stock Analysis: Why T Shares Are a Must-Own for Value and Dividends

Last year, technology stocks ruled and telecoms like AT&T (NYSE:T) got left behind. So, what will an AT&T stock analysis predict for 2024? While the company’s earnings outlook didn’t impress Wall Street, value seekers and yield hunters should still consider a share position in AT&T.

AT&T is a telecommunications giant, but the company isn’t revered by modern investors like it was 40 or 50 years ago. Yet, this doesn’t mean AT&T should be off of your radar screen. You’ll find, after conducting your due diligence, that T stock checks a lot of the boxes that discerning investors should look for.

Play the Long Game With T Stock

Instead of focusing on the latest shiny object in the markets, I encourage you to think long-term. This often means choosing blue-chip names like AT&T with rich histories instead of flavor-of-the-month startups.

Here are some signs that T is the right choice for mature investors. First of all, since the stock has underperformed high-flying tech stocks, AT&T now offers an excellent value.

In fact, AT&T’s GAAP trailing 12-month price-to-earnings ratio is just 8.72x. In contrast, the sector median P/E ratio is 17.83x, which is twice as much as AT&T’s P/E ratio.

Next, I’ll give a shout-out to passive-income investors all over the world. You’ll be glad to know that AT&T pays a forward annual dividend yield of 6.46%. That’s quite generous, compared to the communication-services sector’s average dividend yield of 2.541%.

A good value and a high dividend yield tend to pay off in the long run. So, don’t look for any get-rich-quick schemes with AT&T stock. Just relax, sit back and reinvest those delightful dividend payments every quarter.

AT&T Demonstrates Meaningful Growth

What about growth, though? Investors can check that box for AT&T, as well. In 2023’s fourth quarter, the company’s cash from operating activities increased 10% year over year to $11.4 billion. Furthermore, AT&T’s free cash flow grew from $6.103 million in the year-earlier quarter to $6.373 million in Q4 of 2023.

Moreover, AT&T’s fourth-quarter revenue increased 2.2% YOY to $32 billion, beating Wall Street’s consensus forecast of $31.46 billion. It’s fair to conclude that AT&T had a decent quarter overall.

Granted, AT&T’s bottom-line guidance for the full fiscal year of 2024 was a bit on the soft side. Specifically, the company called for FY2024 adjusted earnings of $2.15 to $2.25 per share, while analysts predicted $2.46 per share.

On the other hand, the soft full-year earnings guidance is, at least in part, due to a temporary issue. As Reuters explained, AT&T wrote down (i.e., revised lower) the value of the company’s “old equipment.”

This isn’t something that investors should expect AT&T to do every quarter, so there’s no need to obsess over the company’s FY2024 earnings outlook.

AT&T Stock Analysis: This May Be the Deal of the Year

This AT&T stock analysis proved a lot of important points. AT&T respects its shareholders and offers generous dividends. Plus, the company certainly isn’t overvalued.

Additionally, AT&T is demonstrating growth in a variety of ways. Investors shouldn’t overlook AT&T even if there are seemingly more exciting or “magnificent” companies out there. All in all, I highly recommend playing the long game by owning T stock and reinvesting those awesome dividend distributions.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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