AT&T Suspends Stock Buybacks to Protect Its Dividend

AT&T's (NYSE: T) stock recently tumbled after the company suspended all of its buyback plans to "maintain flexibility and focus" throughout the novel coronavirus (COVID-19) crisis.

AT&T repurchased $2.1 billion of shares in 2019 and originally planned to spend an additional $4 billion on two accelerated share buyback plans. Investors clearly weren't pleased with the news, but I think it was a smart move that will shield the stock's dividend.

AT&T originally agreed to boost its buybacks after striking a deal with activist investor Elliott Management last October. That plan assumed that AT&T's free cash flow (FCF) -- which rose 30% to $29 billion last year -- would continue rising as it expanded WarnerMedia's assets, beefed up its streaming ecosystem, divested non-core assets, and stopped making major acquisitions.

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Source Fool.com