T - Better Buy: CenturyLink vs. AT&T
AT&T (NYSE: T) and CenturyLink (NYSE: CTL) produce free cash flow that more than covers their generous dividends. But both telecommunication giants must succeed in their transformation to compensate for the secular decline in some of their businesses. They must also reduce their debt loads, which are significant, to sustain their returns to shareholders. CenturyLink offers a much higher dividend yield, but is it a better choice than AT&T for investors looking for safe income over the long term?
AT&T's communication business remains stable. Revenue from the company's mobility segment, which includes services and equipment, increased by 0.8% year over year to $18.7 billion during the last quarter. But AT&T is also facing challenges with its entertainment activities. Because of the shift to online video streaming, the company lost 945,000 premium TV subscribers during the last quarter, lowering that total to 19.5 million.
As a result, revenue from its entertainment group segment dropped by 6.1% year over year to $11.2 billion, and total revenue decreased by 2.4% to $46.8 billion compared to $48 billion a year ago.