The AT&T brand currently has a value of around $30 per share trading in the NYSE. This is below an expected target price close to $32 per share. This is even further below the value expected by major analysts like Hudson Square Research and Oppenheimer which both predict the stock value around $35 per share.
The company has a market capitalization of $179.83 billion, which makes it the largest telecom company in the United States. Its current price to earnings ratio is at a very high $45.97, though the forward price to earnings ratio is much more attractive with a significant drop to $11.94. The continued success of the company helps to encourage investors and is further supported by the very generous dividend yield of 5.8%.
The proceeding addresses major stories which are currently impacting the AT&T brand, along with in depth analysis of the opportunities available with dividend distribution throughout 2012.
AT&T Moves to Further its Coverage in US Markets
One of the most encouraging signs of progress within any industry can be related to the opportunities of expansion. Between 2009 and 2011, AT&T invested close to $110 million into its developing network services in New Mexico. The purpose behind this investment was to increase the businesses mobile broad band coverage as well as increase performance in all of its networks.
Throughout 2011, the company worked on the development of 375 wireless network upgrades in New Mexico, focusing on four major categories. The first category was to improve coverage of the network in New Mexico by activating three new cell towers. The second category was to create the resources necessary to support a fourth generation network by utilizing faster fiber-optic solutions to 125 existing cell towers. The third category was to continue focusing on increasing coverage speed by enhancing 175 other cell locations to provide swifter mobile broadband speeds. The final category was to increase the layers available to frequency at these cell sites to allow for better overall performance.
AT&T is aiming to not only further its technology towards fourth generation resources, but to also meet the growing demand for enhancing local resources. Even with the potential fallout which developed from the failed acquisition of T-Mobile (DTEGY.PK), the company continues to move forward as an industry leader.
AT&T Continues to Lead the Fourth Generation Market
When weighing the value of a communications company, there are two elements in which success must be displayed. For AT&T, their level of success can be determined by the number of consumers they have and the number of mobile devices they are able to sell. When it comes to providing technology for the future, one of the greatest factors to address is seen with a company’s ability to provide iPhone technology to its consumers.
The iPhone was once exclusively available only through AT&T, however, during the last year the iPhone has become available to major competitors such as Verizon (VZ) and Sprint (S). During the last quarter of 2011, Verizon was able to sell close to 4.2 million iPhones to consumers interested in the services of this wireless provider. Sprint has yet to release its sales figures however the dominant provider of this technology has remained AT&T since it was able to sell around 7.6 million iPhones to consumers.
With regards to the total number of smart phones sold, AT&T remained dominate with a 50% increase from the previous quarter to 9.4 million smartphone sold in a single quarter. This technology now accounts for 57% of its wireless customers, which is impressive when compared to Verizon’s 44% smartphone customer use. AT&T is continuing to dominate in the market of fourth generation technology which is helping to increase the level of attraction consumers are having with these communication services.
Dividend Opportunities for 2012
When looking into the dividend opportunities seen with AT&T, the words "reliability" and "steady growth" come to mind. The company displays earnings per share of $0.66 with a tremendous jump in earnings per share for the next year at $2.54. Currently, the company is supporting a dividend yield of 5.8% along with an expected annual dividend payout of $1.76. In the first quarter of 2012, the company already released a dividend value of $0.44 to its investors.
When looking at the history of AT&T’s dividend dispersal, the idea of steady predictions can easily be identified. During 2008, the company increased its dividend payout by almost $0.05 when compared to 2007's quarterly distribution of $0.40. In 2009, the value of the dividend increased by $0.01 for an even quarterly distribution of $0.41 per share. 2010 once again saw another $0.01 increase for a quarterly distribution of $0.42, and in 2011, the same jump occurred increasing the quarterly dividend to $0.43.
AT&T continues to follow this pattern of yearly growth as seen in the first quarter distribution of dividend valued at $0.44 per share. Investors can feel confident that this value of $0.44 per share will continue for each quarter of the remaining 2012 fiscal year.
About the author:Buy low and sell high is easier in theory than in practice– and that’s where we come in.
At Investment Underground, our editors are disciplined, independent thinkers who will inform you when to buy undervalued investments, recognize catalysts, and sell when full value is realized. We provide timely, detailed analysis of our value investing strategies and help you achieve your goals of a reduced-risk trading environment.
If you are fed up with volatile markets and manipulation that put your financial well-being in jeopardy, join us to achieve those gains you deserve without the headache.