Should You Buy AT&T Stock Before Jan. 27?

Stock Performance and Dividend - AT&T stock has risen by around 36% over the past year, generating decent returns for investors [1] - The company's dividend yield remains high at 5%, well above the S&P 500 average of 1.3% [1] - AT&T's dividend is well supported by its free cash flow, with the company projecting $17 billion to $18 billion in free cash flow for 2024 [3][4] - The company pays out about $2 billion in cash per quarter to shareholders, or $8 billion for the full year, leaving room for a potential dividend hike [4] Financial Stability and Growth - AT&T's revenue was down by less than 1% year over year for the period ending Sept 30, 2024, and adjusted operating income was unchanged from the prior-year period [3] - The company's operations are stable, and concerns about the strength of its financials post-WarnerMedia spin-off have been alleviated [5] - However, the business is struggling to grow, and without a significant increase in profitability, there may not be much room for the stock to climb higher [8][9] Valuation and Market Position - AT&T stock is currently trading at a little over 18 times its trailing earnings, higher than its historical average but lower than the S&P 500 average of 25 times earnings [6][7] - The company trades at a premium compared to Verizon but at a discount compared to T-Mobile, which is more of a growth stock [7] - AT&T's high debt load of more than $126 billion in long-term debt and elevated interest rates may limit its earnings multiples [8] Investment Outlook - AT&T's stock could be trading near or at its peak, with limited potential for a significant rally unless the company surprises investors with a big earnings beat [9][11] - The stock is a solid option for dividend investors but may not be heavily undervalued, making it less likely to soar after earnings [10][11]