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Shares of Dish Network parent EchoStar surged on heavy trading volume Friday on reports of a merger agreement could soon be reached between Dish and satellite TV rival DirecTV. With an hour left in the trading day, the stock was up 9% at $28.08.
The Wall Street Journal reported DirecTV could acquire rival Dish, creating one of the nation's largest pay-TV providers, in a deal that could be announced as soon as Monday.
With the Federal Reserve kickstarting a new rate-cutting cycle, dividend stocks have become even more attractive. On Wednesday, the Fed made a hefty 50 basis points cut, surprising many who had anticipated a more modest 25 basis point reduction.
AT&T shares rebounded impressively, generating 28.68% YTD returns, outperforming the S&P 500's 11.2% gains, prompting an upgrade to a "buy" rating. Strong Q2 results with 419,000 new wireless subscribers and a 0.7% churn rate, alongside a 9% increase in free cash flow, support this upgrade. Despite an 8% decline in mobility equipment revenue, AT&T's valuation remains attractive, trading at 9.14x 2026 earnings and 7.4x free cash flow.
AT&T's fundamentals have improved since refocusing on telecommunications. Lower interest rates make AT&T's 5.1% dividend yield more attractive.
The Investment Committee discuss the latest Calls of the Day.
AT&T's Fiber Broadband growth and increased free cash flow make it a compelling option for passive income investors, with a low dividend payout ratio. The Telco's reaffirmed 2024 free cash flow forecast and low valuation based on profits bolster the investment thesis despite recent 52-week highs. AT&T's stock remains moderately valued at 9.5x leading profits, with an intrinsic value estimate of $23-$25, driven by robust FCF growth.
The Federal Reserve's 50-basis-point rate cut seems like a big tailwind for dividend stocks. However, the rate cut also brings several warnings to the dividend stock space. We discuss what these are and how we are positioning our portfolio to navigate rate cuts.
24/7 Wall St. Insights The bond market has dropped long rates to the lowest since December of 2023.
Telefonica and AT&T are high-yield telecoms with checkered pasts. Both have made a lot of progress towards deleveraging and putting their businesses and dividends on a more sustainable path. We compare them side-by-side and share our take on which is the better buy today.