AT&T (T) Stock Lower Today After Increase to Quarterly Dividend

NEW YORK (TheStreet) -- Shares of AT&T (T) are slightly lower this afternoon, trading with heavy volume after its board of directors approved a 2.2% increase in the company's quarterly dividend.

The quarterly dividend rate was increased to 47 cents from 46 cents a share on a quarterly basis, or an increase to $1.88 from $1.84 per share on an annualized basis.

The dividend will be payable on February, 2, 2015 to common stockholders of record on January 9, 2015.

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Separately, investors are watching the government's auction for wireless airwaves closely and may be betting that AT&T will take on more debt than initially expected, which looks risky as competition weighs on industry margins, the Wall Street Journal reported.

About 26.6 million shares changed hands by 3:38 p.m. in New York, compared to the average of 24.43 million shares.

TheStreet Ratings team rates AT&T INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate AT&T INC (T) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • T's revenue growth has slightly outpaced the industry average of 1.1%. Since the same quarter one year prior, revenues slightly increased by 2.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.82, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.40 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Diversified Telecommunication Services industry and the overall market on the basis of return on equity, AT&T INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • The gross profit margin for AT&T INC is rather high; currently it is at 55.88%. Regardless of T's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.10% trails the industry average.
  • You can view the full analysis from the report here: T Ratings Report

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