Looks like we are not the only ones who believe Stankey should cut the dividend. Hopefully, more will jump on this bandwagon.
AT&T's (T) new CEO, John Stankey, should bite the bullet and cut the telecom and media conglomerate's dividend, says one analyst.
https://www.investors.com/news/technology/att-stock-should-stankey-cut-dividend/
They'll continue to pay the dividend until it's no longer feasible to do so (i.e. until the cash flow simply won't cover it).
It's like waiting to treat a severe leg injury (debt) with the hopes that it'll go away on its own. "Leadership" won't touch it until gangrene is present, and by that point, sepsis will have set in.
I agree with the poster saying that the problem is exec salaries being tied to the stock price. Drastic measures for long-term growth won't benefit Stanky, he'd be fired before the reinvestment in the company bore any fruit.
If the dividend is connected the the leadership salaries this won't happen. The stock price hasn't gone up in many years but they keep getting big salary increases, that means that the stock price is not the primary factor.
The problem is the debt. They can't service debt and pay as high a dividend as they do. Something has to give. Cutting people at the rate of 20,000-30,000 per year is only good to pay dividends for couple quarters(at best). Remember they also must build out 5G and Fiber which are capital intensive. Smart money says they try selling something first(generating some cash and breathing room), before cutting dividend, something like AT&T Mexico. Selling DTV or Time Warner impacts cash flow at this point but may happen once Elliott forces Stankey firing in a year. It is just a matter of time before board puts a chairman and CEO backed by Elliott. After that look out DTV and Time Warner.
Cutting the dividend would be the right thing to do in many ways – not the least of which is it could have prevented a lot of the most recent layoffs.
But of course it won't happen. Cutting the deficit by even 25% would mean the stock would immediately plummet because other than the dividend there is no reason at all to buy T. But of course the bigger reason is that the dividend is how the execs and the predator Eliot group make their money. Every quarter T pays it's dividend like a green grocer. For those of us who may have a few hundred shares it comes to perhaps a hundred bucks or so. For Eliot and the execs that runs into tens if not hundreds of thousands of dollars of free money every three months.
Of course this is all going to crumble at some point. Pimping out T as a sound investment is like trying to show someone a playing card and telling them it's a brick: yeah, it has four sides and the height to width ratio looks right, but there is nothing there. No depth.
— why should the company be paying a 7% yield in a 1% interest rate environment —
This supports the idea T is and has been a value trap. I don't think they will not cut the dividend anytime soon because they realize it's a big reason people own the stock. I would be more worried about losing capital in return for 7 percent returns. What is the end game? I don't know, but the options are not very good at this point.
Won't happen , until the US economy goes into freefall.
Dividend investors are what make T a dividend aristocrat. If they cut the dividend , it would threaten that story, and put the stock into a less than favorable outlook
Well, this would be a good decision for the business overall, so of course Stanky won't do it.
He'd rather drive this bus off a cliff doing 80 than appear to be "weak" and back off the gas a little until things settle down.
Sociopaths be like that. Plus, what's he got to lose? When this all finally burns down, he'll get a $20+ million parting gift for all his hard work.
Knowing most people won't read the linked story... (or for the old timers that don't know how to cut and paste...) sure seems to me a lot of good points are made there:
"AT&T's (T) new CEO, John Stankey, should bite the bullet and cut the telecom and media conglomerate's dividend, says one analyst. But he warns AT&T stock could face a "shareholder revolt."
The company reports earnings before the market open on July 23, when Stankey is expected to make his first earnings call appearance as AT&T's chief executive. He replaced Randall Stephenson effective July 1.
"Management efforts to turn AT&T into a convergence conglomerate have saddled the company with two businesses in severe secular decline (DirecTV and linear media) and a balance sheet that equity investors run from at the first sign of debt market trouble," said Credit Suisse analyst Douglas Mitchelson in a report.
AT&T Stock: DirectTV Spinoff
He added: "AT&T's $15 billion per year dividend leaves little flexibility to fix either issue. We believe Mr. Stankey should cut AT&T's dividend — why should the company be paying a 7% yield in a 1% interest rate environment — but the Board, perhaps rightly, fears a shareholder revolt."
The Credit Suisse analyst holds a neutral rating on AT&T stock. Shares in AT&T rose 1.3% to close at 30.25 on the stock market today.
In addition, Mitchelson said AT&T should spin off its DirecTV satellite business. That would open the door to a merger with Dish Network (DISH), he said.
In the March quarter, AT&T said it lost 897,000 pay-TV subscribers and 138,000 internet video subscribers. AT&T acquired satellite TV broadcaster DirecTV for $49 billion in 2015.
For the June-ended quarter, AT&T earnings are expected to fall 11% to 79 cents a share.
Further, AT&T stock has dropped 22% in 2020.
No chance. And AT&T is a cash cow. Read the financials. Also heavily indebted.
lol but att is such a cash cow.