Background: AT&T (T) is a premier communications company. The company's shares are liquid and trade an average of 28 million shares per day.
52-Week Range: $31.74 to $36.86
Price To Book: 2
Forward Estimated Earnings Payout Percentage: 53%
If your first thought is to question AT&T's ability to maintain its outsized 5.2% dividend yield, you're not alone. I've followed Ma Bell for a couple of years looking for any sign that it may become a dividend trap.
I'm not especially convinced buying DirecTV (DTV) will lead to riches for shareholders. As content delivery continually shifts towards an IP based medium, traditional methods may find margins squeezed. Cisco (CSCO) recently predicted that Wi-Fi will soon surpass wired Ethernet. It's just a matter of time before wireless solves the last-mile bottleneck.
That said, AT&T's ability to generate positive cash flow and transformation into a long-term old school utility stock again is incredible. After a decline from nearly $37, the shares are currently in what I regard as a buying dip.
The short interest is slightly elevated, albeit 3.4% isn't enough to convince me an entry under $35 is unwarranted.