An AT&T Dividend Cut Is Coming. Buy This Telecom Instead.

On Monday, AT&T (NYSE: T) confirmed that it will spin off its WarnerMedia entertainment unit and merge it with Discovery. While this will help AT&T reduce its debt and become a pure-play telecom again, it will also force the company to reduce its dividend significantly.

This pending dividend cut gives income-focused investors yet another reason to avoid AT&T shares. Rival telecom company Lumen Technologies (NYSE: LUMN) looks like a better dividend stock.

AT&T made two massive acquisitions between 2015 and 2018 in a quixotic quest for growth. In 2015, it bought DIRECTV for a total enterprise value of $67 billion. It followed that up by buying Time Warner (now known as WarnerMedia) in 2018 at a $104 billion enterprise value.

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Source Fool.com