Canadian Money Forum banner
61 - 69 of 69 Posts

·
Registered
Joined
·
1 Posts
The current payout is about 60% but the 40 to 43% figure quoted is FCF after the spin off. (FCF is projected to drop from 26 to 20B) The spin off and dividend cut take place roughly a year from now. The spin off company will likely not pay a dividend in the short term, as it was stated that they will be focused on paying off their debt. I would like to exit the stock if an opportunity somehow presents itself. Too much negatively surrounding the deal at the moment. And I might add, AT&T spent the year telling us they were committed to maintaining the dividend.
 

·
Registered
Joined
·
1,387 Posts
The current payout is about 60% but the 40 to 43% figure quoted is FCF after the spin off. (FCF is projected to drop from 26 to 20B) The spin off and dividend cut take place roughly a year from now. The spin off company will likely not pay a dividend in the short term, as it was stated that they will be focused on paying off their debt. I would like to exit the stock if an opportunity somehow presents itself. Too much negatively surrounding the deal at the moment. And I might add, AT&T spent the year telling us they were committed to maintaining the dividend.
Thanks for addressing my questions. Companies are notorious for assuring dividend sustainability up until the moment they cut it. I find the stronger the assurance the more likely the cut is imminent. I was excited by the positive response on Monday's announcement and had saw this as my chance to exit. I placed an order to sell expecting further enthusiasm. Along with yourself I would be curious to hear what sell price others would be seeking to exit. Not my style but could this possibly be a swing trade opportunity for those that feel the market has overreacted? I have minimized losses and turned losses into gains in the past by averaging down to sell the entire position on a short term bounce. Currently up on this one if I include dividends but as far as share price is concerned am sitting in the red.
 

·
Registered
Joined
·
21,638 Posts
I see that AT&T now has a 7.5% dividend yield, which itself should be a warning sign. But the total return is far more important.
Reviving an old topic, because now we can see how the story played out.

The AT&T dividend yield was well into 7% and 8% for a while. That was NOT a good sign.

And here we go. Eventually, business reality catches up. AT&T has cut its dividend. Now the 5 year return (total return) is actually negative. And even the 15 year return is just 3% annualized, total return including dividends. That's a terribly low return. The S&P 500 return in the same period is 10% annualized.

It's easy to find super high dividend payers but these stocks are usually not a great idea.
 

·
Registered
Joined
·
1,387 Posts
Thanks James,

I agree that high yields are are good warning sign and total return is what really matters. Based on when you bought within the last 5 years, or 10 or 15 the total return may not mean as negative return. Regardless this sock has underperformed the overall market. When an investor stock picks some selections will outperform and others will underperform. At a certain point preserving a dividend streak is not sustainable if the company cannot achieve the desired results. The dividend cut from AT&T is still confusing to me. Not in the fact that it is needed but that it has been very unclear. It was announced five months ago (post 60) yet the company website still shows the payout at 52 cents

AT&T Inc. | AT&T (att.com)
 

·
Registered
Joined
·
4,345 Posts
AT&T did not just cut their dividend as James suggests. The reduction is part of an overall restructuring that will only be completed next year. At that time the dividend will be cut, but shareholders will then own part of a the new merger between Warnermedia and Discovery. It may not be a good deal for shareholders initially, but could perhaps be down the road if the new entity is successful.

More here: AT&T announces $43 billion deal to merge WarnerMedia with Discovery

BTW - I own about 300 shares of AT&T! May sell because they don't fit our portfolio and future is unclear.
 

·
Registered
Joined
·
21,638 Posts
AT&T did not just cut their dividend as James suggests. The reduction is part of an overall restructuring that will only be completed next year. At that time the dividend will be cut, but shareholders will then own part of a the new merger between Warnermedia and Discovery. It may not be a good deal for shareholders initially, but could perhaps be down the road if the new entity is successful.

More here: AT&T announces $43 billion deal to merge WarnerMedia with Discovery

BTW - I own about 300 shares of AT&T! May sell because they don't fit our portfolio and future is unclear.
Indeed, pretty hard to anticipate how this will play out, and what the net effect on (new) shares will be.

Very messy.
 

·
Registered
Joined
·
21,638 Posts
I sold on a hard stop today. Now have some US$ in rrif without a home.
What are you thinking of doing with the USD ?

I'm about to receive a big IRS refund. Wish they did this months ago when the exchange rate was higher. Now I'm debating converting to CAD now, or holding as USD. The problem is that if the commodity / oil rally continues, the USD might keep falling.

Global traders treat the CAD as a commodity currency, so a commodity bull market likely means a strong CAD.
 

·
Registered
Joined
·
4,345 Posts
What are you thinking of doing with the USD ?
It's not that much, so will probably leave it as cash and withdraw as part of our annual rrif withdrawal. Maybe use it for a snowbird trip if the US ever looks like a safe place to visit. Otherwise, buy a US$ etf that can be easily turned into cash. Which one? No idea at this point!
 
61 - 69 of 69 Posts
Top