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AT&T Aims to Improve Its Leverage Target in 2019

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Apr. 26 2019, Published 8:48 a.m. ET

AT&T’s leverage

At the end of March 31, AT&T’s (T) short-term debt was $11.5 billion, while its long-term debt was $163.9 billion. AT&T had a total debt of $175.5 billion. The company is targeting a net debt-to-EBITDA ratio of ~2.5x by the end of 2019. AT&T expects to reach a net debt-to-EBITDA ratio of ~1.8x by the end of 2022.

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AT&T’s dividend yield

AT&T remains committed to paying higher dividends despite its high debt levels. In the first quarter, the company returned $3.7 billion to shareholders in the form of dividends. AT&T declared a quarterly dividend of $0.51 per share in the first quarter, which implies dividend growth of ~2.0% on a YoY (year-over-year) basis. AT&T’s quarterly dividend was equivalent to an annualized dividend of $2.04 per share and a dividend yield of ~6.6% as of April 24. In comparison, Verizon (VZ) has a dividend yield of ~4.2%.

In the first quarter, AT&T reported a free cash flow balance of $5.9 billion—an increase of ~107.5% YoY from $2.8 billion in the first quarter of 2018, which supported its generous dividend payout. The cash flow from operations rose ~23.5% YoY to $11.1 billion in the first quarter. The total capital expenditures were $5.2 billion in the first quarter—compared to $6.1 billion in the first quarter of 2018.

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