Buy This Dividend Stock While It's Still a Bargain

Group 1 - AT&T reported strong earnings that exceeded estimates, reaffirmed its 2025 outlook, and provided updates on debt reduction and share buyback plans [1] - The company has focused on reducing debt, particularly from past media acquisitions, with the final piece being the sale of its remaining DirecTV stake [2] - AT&T expects to have over $50 billion available over the next three years from free cash flow and the DirecTV sale, supporting its current quarterly dividend of$0.2775, yielding approximately 4.6% [3] Group 2 - Instead of increasing dividends, AT&T plans to allocate $20 billion for share repurchases by the end of 2027, with an additional$10 billion reserved for various potential uses [4] - Share buybacks are set to begin in the second half of the year once the net debt-to-adjusted EBITDA ratio reaches the target of 2.5 [5] - The capital allocation strategy prioritizes buybacks over dividend increases, which may disappoint some dividend investors but could enhance per-share earnings [6] Group 3 - AT&T's market valuation is around $170 billion, and the planned$20 billion in buybacks could reduce the share count by nearly 12% and increase per-share earnings by close to 14% [7] - The stock has risen approximately 40% over the past year, with expectations for continued growth in free cash flow from $16 billion this year to$18 billion by 2027, driven by wireless and fiber business growth and cost-cutting measures [8] - The share buybacks are expected to boost per-share free cash flow at a faster rate than total free cash flow, potentially leading to significant stock gains if valuation ratios improve [9]