AT&T Yields 5.3% and Trades Near a 52-Week Low. Is the SpaceX Threat Really Worth That Discount?

AT&T (NYSE: T) isn't a banal that usually makes headlines. But lately it has been pulled into 1 of the market's hottest stories, SpaceX (NASDAQ: SPCX), and the effect is simply a beaten-down stock terms and a mouth-watering dividend yield.

At astir $21 arsenic of this writing, conscionable supra its 52-week debased of $19.89, AT&T's $1.11 yearly dividend yields astir 5.3%. Part of the crushed the banal sits truthful debased is simply a increasing interest that SpaceX's outer web could yet devour into AT&T's business.

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So is that fearfulness justified? And with the output this high, is the dividend safe? Those are the 2 questions that substance for income investors here.

How existent is the SpaceX threat?

Capturing the interest weighing connected the stock, Oppenheimer downgraded AT&T banal successful June, pointing to SpaceX's Starlink satellites arsenic a structural menace to the telecom's semipermanent broadband and wireless growth. SpaceX has been processing a direct-to-phone service, and it is reportedly plans to motorboat a Starlink mobile work for U.S. consumers.

That is worthy taking seriously. A outer web that tin beam work consecutive to mean phones, with nary compartment towers required, could spot distant astatine a accepted bearer implicit time.

But this menace could instrumentality years to morph into thing meaningful, if it does astatine all.

Just however important is the threat? Oppenheimer estimated that AT&T's fibre physique could apical retired nearer 50 cardinal homes alternatively than 60 million-plus absorption targets by 2030.

Those are meaningful figures, but they play retired done 2030, not the adjacent fewer quarters. They besides beryllium against a concern that is presently growing, not shrinking.

Here's what AT&T is really doing close now. In the archetypal 4th of 2026, gross roseate astir 3% twelvemonth implicit year, adjusted net per stock climbed astir 12%, and the institution posted its best-ever archetypal 4th for precocious connectivity net nett additions. Additionally, it ended the 4th with much than 37 cardinal fibre locations and reaffirmed its people of 60 cardinal by 2030 -- the precise fig Oppenheimer doubts it volition reach. Far from being disrupted, AT&T's halfway businesses are among its brightest spots.

Is the output safe?

For income investors, this is the question that counts.

The bully quality is that the dividend looks good protected. AT&T expects to make much than $18 cardinal successful escaped currency travel this year, portion its dividend costs astir $8 billion. That is simply a payout of little than fractional of escaped currency travel -- comfy coverage, adjacent with the institution investing heavy successful its web and buying backmost stock. On apical of the dividend, absorption plans astir $8 cardinal successful buybacks this year, different mode it returns currency to shareholders. Measured against profit, the payout is conscionable arsenic comfortable: AT&T earned astir $2.99 per stock implicit the past twelvemonth against a $1.11 dividend, good nether fractional its earnings.