Consistent with our previous review of AT&T, we believe that the stock offers investors the chance to own a piece of a dominant wireless business that also has several growth levers it can pull in the coming years, particularly with recently acquired businesses. Debt remains a concern for investors, but the company’s immense free cash flow, in our view, diminishes the importance of this concern. Non-core asset sales will also aid in deleveraging.
Given this, and very high expected total returns, not the least of which is the company’s enormous dividend yield, we rate AT&T a strong buy for 2020. The company’s strong quarterly earnings reports throughout 2019 reinforce our bullish view on the stock. AT&T shares have significantly outperformed the S&P 500 Index year-to-date, meaning AT&T is not quite as compelling of a buy recommendation as it was at its 52-week lows. But we still view the stock as undervalued, and with a high dividend yield above 5% and positive EPS growth, it remains a buy for income and value investors.