T stock's dividend cut may have only been temporary
Many analysts have been bearish on AT&T (NYSE:T) stock
lately because of the change in the company’s structure with a dividend cut
included in the regime’s implementation of new strategies.
I’ve occupied a forward-looking approach with my analysis,
in which I believe the Warner Media spinoff and current statistical dividend
metrics could jointly translate into AT&T becoming a future dividend
powerhouse once more.
I’d like for readers to consider this perspective as a piece
of the puzzle instead of the only variable to base their investment decisions
on. Nonetheless, I do believe it could be a catalyst in determining AT&T’s
future shareholder value distribution.
AT&T will reportedly own 71% of Warner media after
splitting off 29% to Discovery (NASDAQ:DISCA, DISCB, DISCK). Under U.S. GAAP
accounting laws, a subsidiary is recognized as a business combination when the
parent company owns more than 50% of the entity. Therefore, Warner’s assets,
liabilities, revenues, and expenses will be reported in full on AT&T’s
financial statements, with the 29% that isn’t owned by AT&T still being
reported but under a non-controlling interest account.
So, how does this play into AT&T stock? Well, Warner
Media is showing robust growth, having produced fourth quarter revenue of $9.9
billion, translating to 15.4% annual growth. Looking forward, Warner Media’s
expected contribution for 2022 is $37 to $39 billion in revenue, $3 billion in
cash flows, and $6 to $7 billion in EBITDA.
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