Q: With a yield that high, often a dividend cut is not far behind. Thoughts?
5i Research Answer:
Many investors expect a cut, and it is possible. However, this is also at least partially, or even fully, priced into the valuation right now. Like with BCE, a cut does not always mean a declining stock (BCE is up 16% in one year). We would consider T "OK" overall, and could be accumulated for somewhat-conservative income investors. Even a 50% dividend cut would still make the dividend fairly attractive vs alternatives. But to be clear, there are risks here, and we would not call it a need-to-own stock, but just one where a lot of sentiment is negative and this is already reflected.