Lower capital spending frees up cash

Article Excerpt

These two U.S. telecom firms have now completed major upgrades to their wireless networks. Those upgrades should help them attract new users. As well, the lower capital spending bodes well for dividend increases. AT&T INC. $17 is a buy. The company (New York symbol T; Income-Growth Portfolio, Utilities sector; Shares outstanding: 7.2 billion; Market cap: $122.4 billion; Dividend yield: 6.5%; Dividend Sustainability Rating: Above Average; www.att.com) is the largest wireless (cellphone) carrier in the U.S., with 241.5 million subscribers. It also has 4.2 million traditional phone customers (in 13 states) and 15.3 million high-speed Internet users. In April 2022, AT&T merged its WarnerMedia entertainment business with Discovery Inc. to form Warner Bros. Discovery (Nasdaq symbol WBD). At that time, AT&T shareholders owned 71% of the new firm. The company also received $40.4 billion in cash as part of the deal. As a result of the spinoff, AT&T cut its annual dividend rate from $2.08 a share to $1.11. That new rate still gives you a high…