AT&T (T 0.91%) stock is gaining in trading. The company's share price was up 2.3% as of 2:40 p.m. ET, according to data from S&P Global Market Intelligence.
NYSE: T
Key Data Points
Verizon published its fourth-quarter earnings results before the market opened this morning, and its better-than-expected performance is also making investors more bullish about AT&T stock. While the two companies are rivals in the intensely competitive telecom industry, Wall Street's reaction points to expectations for positive trends that could benefit multiple players in the space.
In the fourth quarter, Verizon posted non-GAAP (adjusted) earnings per share of $1.08 on sales of $35.1 billion. While earnings for the period were in line with Wall Street's target, revenue beat expectations by approximately $550 million. Verizon also saw strong net service additions for its wireless phone service and broadband service businesses. Given that these categories are also AT&T's key growth drivers, it's possible that the overall backdrop for the industry is improving.
AT&T is scheduled to release its own fourth-quarter results before the stock market opens tomorrow. Should investors be loading up on this high-yield dividend stock?
AT&T stock is still a smart buy
While Verizon's strong Q4 results don't necessarily mean that AT&T will see similar momentum, there are some positive signs in its report.
Notably, Verizon closed out 2023 with capital expenditures of $18.8 billion -- down from $23.1 billion in the previous year. For this year, AT&T's rival guided for capital expenditures to dip to between $17 billion and $17.5 billion. It looks like the heavy investment cycle for this corner of the telecom industry could be tapering, which would be good news for both companies and their investors.
T PE Ratio (Forward) data by YCharts. PE Ratio = price-to-earnings ratio.
AT&T stock continues to trade at levels that leave room for long-term investors to see strong returns. With the company valued at 7 times this year's expected earnings and paying a dividend that yields 6.5%, AT&T stock remains a cheaply priced passive-income-generating machine.
While the company still has high debt levels, a pivot to a rate-cutting policy from the Federal Reserve this year could help spur bullish momentum for AT&T stock. Given that its shares currently trade at low earnings multiples and offer a high yield, investors who buy at today's prices could enjoy a dual growth engine from capital appreciation and dependable dividend income.
