{"id":54393,"date":"2023-08-29T10:38:42","date_gmt":"2023-08-29T14:38:42","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/att-and-verizon-dividends-have-raised-concern-why-citi-thinks-theyre-safe\/"},"modified":"2023-08-29T10:38:44","modified_gmt":"2023-08-29T14:38:44","slug":"att-and-verizon-dividends-have-raised-concern-why-citi-thinks-theyre-safe","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=54393","title":{"rendered":"AT&#038;T and Verizon Dividends Have Raised Concern. Why Citi Thinks They&#8217;re Safe."},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"WP-BAR-0000730999\">\n<div data-layout=\"wrap\n              \" data-layout-mobile=\"\" class=\"\n        media-object\n        type-InsetMediaIllustration\n          wrap\n  article__inset\n        article__inset--type-InsetMediaIllustration\n          article__inset--wrap\n    article__inset--lead\n  \"><\/p>\n<p>        <!-- eventually when we know what this card will be we can change it and leave this one --><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-wrap\n        article__inset__image\n      \" itemscope=\"\" itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<\/figure><\/div>\n<p>Investors have been down on<br \/>\n        AT&amp;T<br \/>\n       and<br \/>\n        Verizon<br \/>\n       Communications stock this year amid fears over lead-cable contamination, wireless competition, and slowing industry growth\u2014and how these issues will affect their dividends.<strong>\u00a0<\/strong><\/p>\n<p>That makes it a good time to go bargain hunting, according to Citi analysts.<\/p>\n<div class=\"paywall\">\n<p>\n        AT&amp;T<br \/>\n       (ticker: T) and<br \/>\n        Verizon<br \/>\n      (VZ) could offer a turnaround story if the costs of cleaning up lead-wrapped cables turn out to be less than feared and competition among wireless telecom providers stabilizes.\u00a0That should also lessen concerns around the sustainability of their dividend payouts, with the companies\u2019 dividend yields currently at close to 8%. <\/p>\n<p>Citi\u2019s Michael<br \/>\n        Rollins<br \/>\n       raised his rating on Verizon to Buy from Neutral, and his target price on the stock to $40 from $39. He also raised AT&amp;T to Buy but with a maintained target price of $17. He kept a \u2018High Risk\u2019 rating on both companies.\u00a0<\/p>\n<p>Verizon shares were<strong>\u00a0<\/strong>up 1.9% at $34.19 in early trading on Tuesday. AT&amp;T shares were up 2.5% at $14.57.\u00a0<\/p>\n<p>Both companies\u2019 stocks are down this year so far, AT&amp;T is down 23% and Verizon has fallen 15% through Monday\u2019s close. They took a substantial hit after The Wall Street Journal published a report in July that found more than 2,000 lead-encased telecom cables had been left abandoned and warned of potential health dangers associated with the cables. <\/p>\n<p>However, Rollins argued\u00a0there\u2019s reason to expect the shares to bounce back from the hit.\u00a0<\/p>\n<p>\u201cMarket caps for the Telcos with possible [lead-wrapped cable] exposure are down $21 billion vs. an estimated $15 billion cost of remediation based on latest disclosures and our estimates,\u201d Rollins wrote.\u00a0<\/p>\n<p>The continued stock slide of AT&amp;T and Verizon despite a number of Wall Street analysts estimating the immediate reaction to the lead-sheathed cable story was overdone, suggests other worries are also being priced in. However, Rollins argued the wireless industry is healthier than some fear.\u00a0<\/p>\n<p>\u201cIndustry postpaid phone growth is on pace to exceed our prior expectations and consensus, which is a surprise,\u201d Rollins said. \u201cThe business segment seems to be performing better than feared as the level of layoffs seem to be subsiding.\u201d\u00a0<\/p>\n<p>AT&amp;T and Verizon could also increase their free cash flow going forward as they push through a round of pricing increases, while also achieving cost cuts, Rollins said. Those increases suggest the companies are easing up on fierce price competition. <\/p>\n<p>\u201cBetter forward free cash flow should\u2026help reduce net debt leverage and support dividend payouts,\u201d Rollins said. <\/p>\n<p>However, it\u2019s not all good news for AT&amp;T and Verizon. Rollins said Citi is maintaining<br \/>\n        T-Mobile US<br \/>\n       (TMUS) as its top pick in the wireless sector, noting it is in a better position to lead the field on cash returns to shareholders. <\/p>\n<p>Write to Adam Clark at adam.clark@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/articles\/at-t-verizon-stocks-lead-cables-exposure-t-mobile-c712c670?mod=markets\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Investors have been down on AT&amp;T and Verizon Communications stock this year amid fears over lead-cable contamination, wireless competition, and slowing industry growth\u2014and how these issues will affect their dividends.\u00a0 That makes it a good time to go bargain hunting, according to Citi analysts. AT&amp;T (ticker: T) and Verizon (VZ) could offer a turnaround story [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":54394,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-54393","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>AT&amp;T and Verizon Dividends Have Raised Concern. 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