Will AT&T buy back shares?
In the first quarter of 2019, AT&T (T) paid a dividend of $3.7 billion. AT&T’s management expects to embark on a stock buyback program in the near future. During the JPMorgan Global Technology, Media and Communications Conference last week, Randall Stephenson, AT&T’s chair and CEO, spoke about the company’s capital allocation plan.
Stephenson stated, “As we move to 2020, we think that cash flows continue to be very strong and we’ll continue debt paydown via a very methodical pace in 2020 but allocate capital towards retiring some stock as well, we think it’s — with stock trading where it is, it’s time for us to begin to take some of that stock back in as well.”
What’s a buyback?
A share buyback or repurchase involves a company buying back shares from investors. Share buybacks are considered a more tax-effective way to enhance shareholders’ returns compared to dividend payments. Repurchasing shares results in a decline in the number of a company’s shares outstanding in the stock market, which boosts its adjusted EPS. As we can see in the chart above, AT&T reported adjusted EPS of $0.86 in the first quarter compared to $0.85 in the first quarter of 2018.