On 10/12/17, AT&T stock saw almost its largest drop in price in 9 years. Dropping by over 5.5% in one trade day. This seems quite exaggerated, but the reasoning is justified. The massive hurricanes that have hit the US lately have utterly destroyed most of AT&T infrastructure in the affected areas. Because of this, they will have to spend big cash to get everything up and running again. On top of that, they will be waiving fees that would be typically passed onto the consumer to help rebuilding efforts.
So, there are some rough waters coming in the next quarter for T, but I am a long-term holder and will try to find some capital to buy more T while it’s still in the over-sold territory. Buying at ~$35-36/share locks in a juicy 5% yield. Well above the market average.
The P/E ratio for AT&T (T) is now at 16.91, meaning it’s still cheap compared to the overall market.
A basic, yet typical, way to measure how expensive a stock is, is by it’s P/E ratio. (Price/Earnings) You can compare most stocks to the current P/E ratio of the entire S&P for instance, which is currently around 24.6. So theoretically if a stock’s P/E is below 24.6, it could be considered cheap.
The current payout ratio for it’s dividend is at 41%, meaning it still has room to grow the dividend in the future without affecting much on their bottom line.
Current Dividend Yield: 5.13% Payout Ratio: 83%
*I currently own 25 shares of T