VZ - AT&T: Come For The Value Stay For The Income

2024-06-04 10:01:06 ET

Summary

• AT&T maintains a leading market position within the U.S. telecom industry, is significantly undervalued, and offers a safe and lucrative dividend to shareholders.
• In the aftermath of various prior missteps, the company has streamlined operations and improved its balance sheet while also investing for the future.
• The company's reliable free cash flows should result in value accumulation for shareholders. Notably, the stock trades at ~7x FCF.
• Equity in AT&T is a bargain compared to shares in its competitors, with strong cash flows and a high likelihood of capital appreciation.

Making the case that AT&T Inc. ( T ) is undervalued is a lot like stepping over a one-foot bar. The U.S. telecom giant is comfortably profitable, trading at low multiples, cleaning up its balance sheet, investing for the future, and even marginally growing – all while distributing a highly attractive dividend to shareholders. With universal brand recognition and only two true competitors, AT&T’s moat is vast and its market position is firmly entrenched. The company’s recent performance evidences that it isn’t going anywhere....

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