Just as movie theatres started to open, investors dumped AT&T (NYSE:T) stock in the last week. Shares fell 2% on the week and are down 3.91%. Though the dividend yield is 7.17%, investors should not get fooled with the income payout.
Wells Fargo (NYSE:WFC) offered similar rates before a Fed cap forced the company to slash dividends to raise cash flow. AT&T is already at a 50% payout ratio and the CEO indicated a willingness to increase that to 60%.
Yet WarnerMedia’s reliance on HBO Max to stop the cash flow burn is not enough. The streaming service is expensive than that offered by Disney (NYSE:DIS), Apple (NASDAQ:AAPL), and Netflix (NASDAQ:NFLX). Roku (NASDAQ:ROKU) is also growing at exceptional rates, too.
AT&T is not a streaming services firm. It sells cable and mobile phone plans. Its movie studio business will continue to suffer so long as Covid-19 pandemic risks rise this fall and winter. Investors are taking a risk buying the stock after the $30 support level, which held since June, breaks down.
The market selloff, led by Apple and Tesla (NASDAQ: TSLA), triggered general selling in stocks. AT&T is on sale again. Income investors may get a better price for the stock in the coming days.
