The past few years haven't been great for AT&T (NYSE:T). After going on a multi-year acquisition binge, the company is saddled with an enormous debt load and a steadily shrinking pay-TV business. Its stock price has fallen 28% over the past year, while many investors move on in fear that its weak businesses and bloated balance sheet will end up taking a bite out of the only thing that's held up well: the company's dividend. 

On the Oct. 22 edition of "The Wrap" on Motley Fool Live, host Jason Hall debates with Motley Fool contributors Danny Vena and Lou Whiteman about AT&T's prospects. Is AT&T a high-yield bargain or a dividend trap? Check out the video to learn where these three experts stand. 

Transcript: 

Jason Hall: AT&T just announced earnings too, AT&T, ticker is T. Danny do you mind hopping in and putting in the tickers in the chat. I'd appreciate that on these while I'm rambling. AT&T just reported earnings, stock climbed after the results. Here's the thing. Earnings fell 25% to $0.39 a share loss another roughly 600,000 pay TV customers. A lot of that was DirecTV. But added four and a half million subscribers to HBO Max, that's their over the top streaming stand-alone HBO service. Here is the thing, the dividends 7.4% yield, recent prices on the just declared 52 cents a share quarterly payout. Danny, I'm going to ask you to go first here. Is AT&T a high-yield bargain or is it a-

Danny Vena: Dividend trap.

Jason Hall: You didn't even let me finish!

Danny Vena: Trap.

Jason Hall: Tell us why.

Danny Vena: It's not sustainable. AT&T is in an odd position in the industry. They have historically lost phone subscribers. They're losing their subscribers. It's not sustainable for them. They thought that that their savior was going to be HBO Max. Yes, they're grabbing new HBO Max subscribers, but it's not going to save them from all of the other subscribers they're losing. They're just not going to be able to generate the profitability, the revenue, as long as they keep losing subscribers. So they can't keep that dividend at that rate over a long sustained period of time. Dividend trap.

Jason Hall: Hot lightning take there. What say you, Lou Whiteman?

Lou Whiteman: What he said. I agree. My question about the AT&T is first looking at it as a potential investment, what part of this business is not just ripe for commoditization? What part of this business just really gets you excited from a growth standpoint? I don't see it. It's a collection of assets we know, and that's about the nicest thing I'll say about it.

Jason Hall: I'm going to take the counter approach to take to both of you and say that it is an absolute high-yield bargain right now, and I'm going to tell you why. Yes. It paid way too much for DirecTV. It was a stupid expense on a terrible business that was in decline before they even bought it in all reality. But HBO Max that shift to streaming is really smart because it's going to start decoupling some of their best assets from cable. They added half-a-million people to their postpaid self-service customers. That part of the business is growing. As much as 5G is going to be a zero-sum in a lot of ways, because of the size of their network, and the depth of their network, and the broad scope of their network, 5G can unlock some business-to-business opportunities for things like machine-to-machine communications, remote connectivity that could help offset a lot of other parts of the business.

Danny Vena: I'm sorry, go ahead.

Jason Hall: I'll let you jump in here in a second Danny. Also, a big part of the reason that their business struggled a little bit is because Hollywood was basically shutdown. Movie theaters are basically shutdown. Going forward, a lot of that is going to clean itself up and it's going to help their results. Here is the big one. This is where I am going to close up. Yeah, they earn 39 cents a share and their dividend is 52 cents a share. You say, how in the hell is that sustainable when you're paying out 30% more in dividends and you're actually earning? Because they have some very large non-cash expenses that don't reflect in those GAAP results on a cash basis. This is consistent and it is a reliable metric. They generate about double the cash flows that they need to support that dividend. I think it's absolutely supportable and I think if it's somebody that's looking for a sustainable, reliable dividend, this is absolutely worth buying. Danny, counterpoint before we move on.

Danny Vena: My counterpoint was what, I would really like to see AT&T do, is split off into two companies like IBM is doing. Old World assets versus New World assets and then we're talking something.

Jason Hall: Spin it off or sell it off. I agree. I 100% agree with that. Get that legacy business buried in the graveyard. Move on.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.