High debt a concern for both picks

Article Excerpt

In April 2022, AT&T merged its WarnerMedia entertainment business with Discovery Inc. to form Warner Bros. Discovery (Nasdaq symbol WBD). AT&T investors received 0.241917 shares of WBD as a tax-free distribution for each share they owned. 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. Since the split, AT&T shares have made little progress, while WBD’s are down over 60%. That’s mainly due to concerns over the high debt loads of both companies. We feel each will benefit as it focuses on its main operations, but AT&T is in a better position to cut its debt. That reduces its risk, and will let it maintain the current dividend rate. AT&T INC. $17 is a buy. The company (New York symbol T; Utilities sector; Shares outstanding: 7.2 billion; Market cap: $122.4 billion; Dividend yield: 6.5%; Takeover Target Rating: Medium; www.att.com) is the largest wireless (cellphone) carrier in the U.S., with 241.5 million…