NYSE WBD SERIES

The company remains an attractive investment under the current macroeconomic backdrop as growing price pressures and rising interest rates encourage investors on a flight to quality stocks like AT&T, which engages in a predictable business with robust cash flows and attractive dividend yield.

While some are concerned about AT&T’s slashed dividends following the WBD spin-off, we see it as a fair, temporary price to pay for greater upside ahead. Meanwhile, on the other hand, AT&T will be able to return to what it does best ahead of a transformational era for telecommunications and broadband connectivity buoyed by digitization demands as mentioned above.

On one hand, WarnerMedia will move on with Discovery to create the industry’s largest and most attractive content library, which is slated to command a meaningful share of the fast-growth video streaming market. Essentially, the breakup of AT&T and its WarnerMedia unit will put an end to years of stifled growth for both. In today’s analysis, we will focus on the granularity of how the upcoming spin-off will take place and what it means for investors of AT&T RemainCo and WBD. Meanwhile, AT&T’s “RemainCo” post spin-off will restore focus on its communications and connectivity roots once again, which comes at an opportune time as the industry continues to accelerate transition towards 5G and fiber opportunities ahead of growing digitization trends. Additionally, AT&T shareholders will get to partake in high-growth opportunities stemming from WBD through a 71% ownership in the new combined company.

As part of the transaction, AT&T will receive $43 billion in cash for contribution towards its deleveraging efforts.

NYSE WBD SERIES

In our latest series of analyses on the stock, we see multiple advantages from the upcoming WBD transaction. Based on the company’s latest Analyst and Investor Day Presentation, AT&T will divert its focus on expanding its 5G and fiber connectivity capabilities and market share, while maintaining its deleveraging strategy to restore flexibility needed to support additional growth going forward. The completion of the upcoming Warner Brothers Discovery (“WBD”) spin-off will officially mark the end of AT&T’s foray in media and entertainment. While its value has declined a bit (about 15%) since the early January rally, AT&T's stock has remained relatively resilient against the recent surge in volatility across the broader market. Paired with its sustainable growth outlook ahead, the stock remains a candidate for improving annual dividends and share performance over the longer-term.ĪT&T's stock ( NYSE: T) has consolidated around the $23 to $25 level in recent months following management’s confirmed choice of a spin-off for the fast-approaching Warner and Discovery (NYSE: DISCA / DISCK / DISCB) merger. Meanwhile, AT&T's dividend yield, despite the trim down, still beats those of its industry peers and other dividend-paying stocks on the market.Discovery spin-off, we believe there are attractive upsides in the newly combined company that could potentially more than offset AT&T's dialed-back dividends. While dividend-focused investors who have put their money into AT&T for generous yields in the first place may not be interested in the upcoming Warner Bros.On the other hand, the company has provided assurance for a return to GDP+ growth in coming years as it regains focus in capitalizing on 5G and fiber momentum ahead.On one hand, dividend- and income-focused investors were taken back by AT&T's decision to slash dividends on the lower range of its original post-close dividend pay-out guidance.AT&T's Analyst and Investor Day Presentation last week stoked mixed investor sentiment for the stock.

Nyse wbd