T stock's shocking dividend cut was the culmination of years of mismanagement at AT&T
AT&T (NYSE:T) shocked the world this summer. AT&T
has long been a centerpiece of many retirees and income investors’ portfolios.
T stock generally yielded in the 6% range annually, and at times paid an even
higher rate than that.
This was a massive number in a zero interest rate world.
With banks paying virtually nothing on savings accounts, is it any wonder that
AT&T’s fat yield seemed like an obvious winner?
Unfortunately, AT&T couldn’t support its yield any
longer. The company took on tens of billions of dollars in debt in recent
years. It was caught in a tough spot, as its core telephony business has
limited growth prospects. Yet, shareholders wanted their annual dividend hike.
Management tried to get more and more creative with merger
and acquisition activity to keep its dividend track record intact. But, in the
end, it just didn’t work out.
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