---
title: "Should You Buy AT&T While It's Below $20?"
description: "Telecom giant AT&T has underperformed the S&P 500 due to a bloated balance sheet and lack of earnings growth. However, the company is slimming down and focusing on telecommunications, cutting dividend"
type: "news"
locale: "en"
url: "https://longbridge.com/en/news/200279845.md"
published_at: "2024-03-20T13:18:53.000Z"
---

# Should You Buy AT&T While It's Below $20?

> Telecom giant AT&T has underperformed the S&P 500 due to a bloated balance sheet and lack of earnings growth. However, the company is slimming down and focusing on telecommunications, cutting dividends to pay down debt. With a healthy dividend payout ratio and progress in deleveraging, AT&T's finances are improving. The company's customer acquisition could spark growth, and the stock is trading at a low forward P/E. Long-term investors may consider buying AT&T at its current price.

Telecom giant **AT&T** (T -0.75%) has seemingly hung around the $20 mark for years. Today, shares are trading hands at $17. The stock has underperformed the **S&P 500** due to a bloated balance sheet and lack of earnings growth.

However, things could finally be looking up. AT&T is slimming down and focusing on what it does best: telecommunications. It also cut the dividend enough to free up cash to help pay down debt.

Is this enough to move the stock higher? Should investors buy the stock while it's under $20 per share? Here are three things you must know to decide.

## 1\. AT&T is still a dividend machine

Most people buy AT&T stock for the dividend. Management's decision to slash the dividend in 2022 must have been tough, but it's proving to have been the right move. You can see below how much the smaller dividend has freed up AT&T's cash flow. The company's dividend payout ratio is now a healthy 40%, translating to $12 billion in cash left over after capital expenditures (investments into the business), interest expenses, and dividends.

T Cash Dividend Payout Ratio data by YCharts

Yep, that's discretionary cash profits that can go toward paying down debt (more on that in a minute) and eventually repurchasing shares to help drive earnings growth. The best part? AT&T is still a high yielder. Investors are getting a 6.5% starting dividend yield at the current share price.

## 2\. The balance sheet is healing, albeit slowly

AT&T's most significant problem for years was the debt from its ill-fated DirecTV and Time Warner acquisitions -- nearly $200 billion from the Time Warner deal alone. So much debt created billions in interest expenses that suffocated profits.

The company got a hefty cash infusion from spinning off Time Warner in the spring of 2022 and has made further progress in deleveraging to just over 3 times its earnings before interest, taxes, depreciation, and amortization (EBITDA). There is still work to be done, but annual interest expenses have already fallen nearly $2 billion from their 2019 peak of $8.4 billion.

T Total Long Term Debt (Quarterly) data by YCharts

Having billions of dollars in excess cash each year is an excellent sign that progress will be made. It's taken years to reach this point, but investors can finally be optimistic about AT&T's finances.

## 3\. Customer acquisition could spark growth

AT&T is America's largest wireless carrier, which puts a target on its back for its primary competitors, **Verizon Communications** and **T-Mobile**. However, AT&T had a great 2023, picking up new customers. Post-paid phone subscribers grew by 1.7 million year over year in the fourth quarter, while fiber optic internet customers increased by 1.1 million. Adding customers is the best way AT&T can drive top- and bottom-line growth.

For 2024, AT&T guided wireless network revenue growth of at least 3% and broadband growth of at least 7%. This is promising and lays the path for earnings growth if management can continue paying down debt. Interest expenses take away from earnings, so every dollar saved on interest will flow to the bottom line.

## Should investors buy under $20?

Today, at $17 per share, AT&T trades at a forward P/E of 7.5. That sets a low bar for solid investment returns when you factor in the stock's starting 6.5% dividend yield. Analysts believe earnings per share will grow roughly 3% annually over the next several years.

Still, 3% earnings growth plus that dividend is nearly 10% total returns annually. Long-term investors can collect the dividend while waiting for debt to go down. The eventual tailwinds of smaller interest payments should boost earnings, boosting investor sentiment, which should theoretically award a higher valuation to the stock.

Nothing is guaranteed, and this could take a few more years to play out. But if you're patient, the argument for buying AT&T at today's price is a solid one.

### Related Stocks

- [T.US - AT & T](https://longbridge.com/en/quote/T.US.md)

## Related News & Research

| Title | Description | URL |
|-------|-------------|-----|
| Empirical Financial Services LLC 以 Empirical Wealth Management 名义增持了美国电话电报公司（AT&T Inc.）的股票 | Empirical Financial Services LLC 在第三季度将其在美国电话电报（AT&T Inc.）的持股增加了 17.6%，目前持有 390,744 股，价值 11,035,000 美元。其他机构投资者也调整了他们的持仓， | [Link](https://longbridge.com/en/news/276509547.md) |
| 纽约市养老金基金起诉美国电话电报，原因是其排除了多样性提案 | AT&T 正面临来自四个纽约市公共养老金基金的诉讼，指控其排除一项股东提案，该提案要求公司披露其员工的种族、民族和性别人口统计数据。这些基金认为，AT&T 拒绝就该提案进行投票，引用新的 SEC 政策，毫无理由，并造成了不可逆转的损害。他们 | [Link](https://longbridge.com/en/news/276156999.md) |
| 美国全球投资者｜10-Q：2026 财年 Q2 营收 2.51 百万美元 |  | [Link](https://longbridge.com/en/news/276486981.md) |
| 美国舒适系统公司｜8-K：2025 财年 Q4 营收 26.46 亿美元超过预期 |  | [Link](https://longbridge.com/en/news/276377066.md) |
| 罗杰斯｜10-K：2025 财年营收 8.11 亿美元超过预期 |  | [Link](https://longbridge.com/en/news/276371438.md) |

---

> **Disclaimer**: This article is for reference only and does not constitute any investment advice.
