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Trade AT&T Stock
Headquartered in Dallas, Texas, AT&T Inc. is an American multinational conglomerate holding company that was founded in 1983, and it is a global leader in the provision of telecommunications and digital entertainment services.
Going further back in time, AT&T has a rich history that is linked to the 19th-century invention of the telephone by Alexander Graham Bell. A series of anti-monopoly lawsuits led to divisions and divestitures, giving birth to the modern-day AT&T Inc., which no doubt still remains a giant conglomerate.
AT&T held its initial public offering (IPO) just a year after its founding on July 19, 1984. AT&T stock is listed in the New York Stock Exchange (NYSE) where it trades under the ticker symbol ‘T’. The stock falls under the Wireless Telecommunications Industry, under the Telecommunications Services sector.
AT&T operates through four business segments:
- Business Solutions – This segment offers business customers comprehensive communication solutions by providing strategic services, such as IP-based networking solutions, app-based routing, broadband, as well as data and voice solutions;
- Entertainment Group – This segment provides on-demand video, Internet, voice communication, as well as interactive and targeted advertising services to US-based customers;
- Consumer Mobility – This segment is responsible for providing triple-play (voice, video and high-speed Internet) wireless service to consumers, as well as to wholesale and resale wireless subscribers located in the United States or its territories.
- International – This segment runs entertainment services in Latin America and wireless services in Mexico. AT&T started reporting its financials in terms of the above segments in Q3 2015, and since then, the Consumer Mobility unit has been the consistent best performer, bringing in over 40% of the company’s revenues.
AT&T has always been an active player in the mergers and acquisitions market. Some of its recent major buys include Lusacell and Nextel Mexico that were bought in 2015 and which merged to form AT&T Mexico.
In 2015, AT&T also acquired DIRECTV for $48.5 billion in a deal that effectively made AT&T the largest pay-TV provider in the United States and the world.
Still, the standout deal, thus far, has been the 2016 $85.4 billion merger with Time Warner that turned AT&T into a media and entertainment powerhouse with control over properties such as CNN, Warner Bros, HBO, TNT and TBS.
AT&T went public with a split-adjusted IPO price of $1.25, and since then, the company has had 3 stock splits as follows: a 3-for-1 split on 22nd May 1987; a 2-for-1 split on 25th May 1993; and a 2-for-1 split on 19th March 1998.
AT&T stock has been a solid performer over the years. Its best years are undoubtedly in the 90s when the stock rose to hit its all-time high of circa $60 in July 1999. It maintained its resilience for a few months and then faced its first major headwind in November 2000.
This occurred when the entire telecom industry was under siege as there was pressure to undertake major capital-intensive infrastructural projects to remain relevant and prepare for the future of the Internet.
The stock was then pressured lower, finally reaching a support low of circa $20 in May 2003. Since then, AT&T has been a resilient performer, mirroring the strength of the US economy and consistently outperforming the benchmark S&P 500 index. As of November 2018, the AT&T stock is trading around $30, and the company has a market capitalisation of about $217 billion.
AT&T has always been a generous dividend payer; paying out incremental quarterly dividends since it went public in 1984. The first quarterly AT&T dividend was $1.40 a share, increasing to $1.74 a share in 1987 when it undertook its first forward split.
It then started paying out $0.58 a share, which also increased gradually to $0.73 a share in 1993 when the second share split was done. After that, the company paid $0.38 a share, which increased to $0.45 a share when the third split was performed in 1998. The company then started to pay out $0.23 a share, and this has jumped to $0.50 a share as of Q4 2018.
A consistent dividend payer implies a mature and financially healthy company, and this will always be attractive for many investors. Some investors will love the consistent cash flow, while others will savour the opportunity to reinvest their dividends for even more compounded profits.
How to Trade AT&T Stock?
AT&T is one of the most followed and traded stocks on Wall Street. Here is what to always keep in mind when trading the AT&T stock:
- Tariffs and Trade Agreements
As of November 2018, AT&T is the largest provider of pay-TV in the world, and it has customers in the US and more than a dozen Latin American countries. It also offers cloud-based solutions to businesses worldwide. As a multinational conglomerate, it means that changes in tariffs and trade agreements can impact the AT&T stock significantly.
- Legislative or Taxation Policy
AT&T had faced the brunt of crude legislative policy in the past, notably when it was split up after being deemed to be a monopoly. In June 2018, it had to conclude a long-running legal saga to formally complete the Time Warner merger. AT&T also operates in multiple jurisdictions and plans an aggressive international expansion plan. This exposes it to complex legislative and taxation regimes that may hinder wider profit margins.
- Competitor Performance
As of November 2018, AT&T is a leader in the pay-TV sector, but it comes second in wireless communication, just behind Verizon. In this space, it also faces fierce competitors in T-Mobile and Sprint, two companies that are planning a merger. This could muddy the waters even further. Its Time Warner merger also means that it attracts heavyweight competitors in the mainstream and internet media scene. It is therefore important to track the performance of its competitors to gain objective insight on where AT&T truly stands.
- Periodic Earnings Reports
The AT&T fiscal year runs from January to December, and the company releases quarterly earnings reports to keep its shareholders up to date on its financial health. When studying AT&T’s earnings, it is essential to look at metrics, such as subscriber growth as well as debt and dividend payouts. AT&T has always maintained incremental dividend payouts, and a lower payout would likely be a negative signal. With regards to debt, AT&T has taken huge leverage with its recent major acquisitions, and it is important to assess whether the company is sufficiently capable of meeting its debt obligation.Since AT&T operates in a dynamic and fast-paced industry, it is important to investigate the impact that all these factors can cause in the short term, rather than in the long term when the AT&T stock price would have discounted them accordingly.
Why Trade AT&T stock with AvaTrade?
- International Regulation – AvaTrade is a regulated forex trading broker, which ensures all its trading services are transparent, and that client funds are safe, secure and held in segregated accounts.
- As with all other stock CFDs, you can long or short AT&T according to market conditions.
- Leveraged Trading – Trade AT&T stock with a leverage of up to and enjoy higher profits with minimal capital outlay on trades that end successfully.
- Competitive spreads – Trade AT&T alongside other global stocks with minimal costs. This ensures that profit margins are maximised.
- The AvaTrade top trading platforms suits both short and long-term trading styles. This means investors can profit from short-term price induced moves, such as growth in subscriber numbers or potential long-term moves that can be inspired by major acquisitions.
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- Automated Trading Solutions – AvaTrade offers free automated trading; simply set your trading parameters and you no longer need to analyse the markets 24/7 to pinpoint trading CFD’s opportunities.
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AT&T Stock FAQ
- Why should I trade AT&T shares?
AT&T is one of the best-known U.S. telecommunications brands, with a rich history going back to its original founding in 1885 by telephone inventor Alexander Graham Bell. That alone isn’t enough reason to trade on AT&T shares, but the volatility of the stock, which can see it print fairly large daily candles on a regular basis, is a good reason to put this telecommunications stock on your daily watch list. So while investors love the large dividend being paid by AT&T, traders can do even better thanks to the frequent moves up and down in what’s become a fairly volatile stock on a daily basis.
- Is AT&T the best telecommunications stock for trading?
We like the telecommunications sector for trading opportunities because it tends to have a lot of froth, with shares moving rapidly up and down on an almost daily basis. AT&T is one of the best stocks to consider trading in this sector, because it has some of the greatest volatility, making it quite suitable for scalpers and day traders. Traders with a longer time horizon, like swing traders, may not find AT&T shares to be their first choice however, because the stock does not have long, strong trends generally.
- What’s the best strategy for trading AT&T shares?
There are a number of ways to trade AT&T shares depending on your own trading style and risk tolerance. One of the best is to use CFDs to trade on the price action of the stock, which can often yield a quick 1-2% profit. When combined with the leverage available by using CFDs any quick day trading or scalping strategy can give traders a nice profit. Plus, it’s possible to go short just as easily as going long, which is a real benefit when trading a stock with price action like that of AT&T.