Acquisitions set to fuel their growth

Article Excerpt

Dear Client: AT&T and Verizon face strong competition in their wireless and Internet businesses, and both have used acquisitions to enhance their services and attract new subscribers. Expanding this way adds risk, but we feel those new businesses will spur long-term earnings for each company and provide more cash for dividends. AT&T INC. $38 (New York symbol T; Income Portfolio, Utilities sector; Shares outstanding: 6.1 billion; Market cap: $238.1 billion; Priceto-sales ratio: 1.4; Dividend yield: 5.2%; TSINetwork Rating: Average; www.att.com) is the largest wireless carrier in the U.S. It also offers tra ditional phone and satellite TV services. The company’s revenue rose 28.5%, from $127.4 billion in 2012 to $163.8 billion in 2016. In addition to strong demand for wireless and high-speed Internet services, AT&T fuels its growth with acquisitions. They include its July 2015 purchase of DirecTV for $48.5 billion (70% stock and 30% cash). That business now has 25.1 million satellite TV customers in the U.S., and 13.7 million customers in…