Burned by AT&T's Dividend Cut? You May Want to Buy This Rival Instead
Last week, AT&T (NYSE: T) announced it would be spinning off its WarnerMedia unit and cutting its dividend. While these actions were probably the right moves for the company, there wasn't much joy from shareholders, as the stock sank on the news.
Many AT&T shareholders are retirees who likely held the stock for its high dividend, but the new AT&T dividend should only be a little more than half the current payout, likely just under 4% at the stock's current levels.
While the new media company could have promise, AT&T's "core" telecom business is up against some stiff competition in the race for 5G. AT&T is currently behind in that race, based on the roadmaps laid out by rivals Verizon (NYSE: VZ), which now has a higher dividend, and T-Mobile (NASDAQ: TMUS), which doesn't have a dividend, but does have a clear lead in 5G deployment. That's probably why AT&T cut its dividend, in addition to offloading some $43 billion in debt to the new media company.
Source Fool.com