In other words, AT&T will halve its payout, ending a 36-year trend of yearly dividend increases. It will no longer be a Dividend Aristocrat of the S&P 500, a prestigious label reserved for index members who have increased their distributions for at least 25 consecutive years.
AT&T presently pays a forward dividend yield of 6.5 percent, so if the deal complete in mid-2022, investors should expect a 3 percent to 4% yield. The new media spin-off is unlikely to pay a dividend because it plans to reinvest the majority of its profits on new content for WarnerMedia and Discovery.
How many years has AT&T increased its dividend?
AT&T has long been a popularif divisiveholding among income-seeking investors, with a yield of around 7% and a lengthy history of consistent yearly dividend increases. The stock belongs to a select group of firms known as Dividend Aristocrats, which have grown their dividend payouts for at least 25 years.
What will happen to AT&T stock after merger?
AT&T will receive $43 billion in cash and equivalents, as well as the retention of debt, under the merger’s stated terms. Furthermore, AT&T stockholders would receive 71% of the outstanding stock in the new business, while Discovery owners will keep the remaining 29%.
Is Altria’s dividend safe?
Our predictions show a 65 percent total return (17.2 percent annualized) by 2024 year-end, with extra upside if the ABI holding is sold after the lockup expires this October.
Will ATT shareholders get stock in the new company?
AT&T would receive $43 billion (subject to adjustment) in a combination of cash, debt securities, and WarnerMedia’s retention of certain debt under the terms of the agreement, which is structured as an all-stock, Reverse Morris Trust transaction, and AT&T’s shareholders would receive stock representing 71 percent of the new company; Discovery shareholders would own 29 percent of the new company. Both AT&T and Discovery’s boards of directors have given their approval to the deal.
The companies anticipate that the deal will provide significant value to AT&T and Discovery shareholders by:
- Bringing together the media industry’s most powerful leadership teams, content creators, and high-quality series and film libraries.
- Accelerating both firms’ goals to become worldwide leaders in direct-to-consumer (DTC) streaming services.
- WarnerMedia’s extensive studios and portfolio of classic scripted entertainment, animation, news, and sports with Discovery’s global leadership in unscripted and foreign entertainment and sports, combining complementary and diverse content assets with broad appeal.
- Creating a new firm with considerable size and investment resources, including estimated revenue of $52 billion in 2023, adjusted EBITDA of $14 billion, and an industry-leading Free Cash Flow conversion rate of around 60%.
- Creating annual cost synergies of at least $3 billion for the new company in order to enhance its investment in content and digital innovation, as well as scale its global DTC business.
This transaction allows AT&T and its stockholders to unlock value in their media assets and better position their media business to take advantage of the industry’s attractive DTC trends. Furthermore, the deal enables the corporation to better capitalize on long-term connection demand:
- AT&T shareholders own a piece of a leading media corporation with a diverse global brand portfolio, strong DTC potential, and well-balanced assets.
- Increased investment in growth sectors mobile and fixed broadband creates significant benefit for AT&T stockholders.
- After closing, AT&T’s capital structure will improve, making it one of the best-capitalized 5G and fiber broadband firms in the country.
- To tighten the investment focus and recruit the best investor base for each firm, results were obtained in two independent companies – one in broadband connection and the other in media.
The new company will compete globally in the fast-growing direct-to-consumer market, offering exciting content to DTC consumers across its portfolio, which includes HBO Max and the newly launched discovery+. Discovery’s worldwide reach, wealth of local-language content, and extensive regional experience across more than 200 countries and territories will be combined with WarnerMedia’s legendary content catalog of popular and valuable IP. The combined firm will be able to invest more in original content for its streaming services, expand programming options across its global linear pay TV and broadcast channels, and provide consumers with more innovative video experiences and options.
HBO, Warner Bros., Discovery, DC Comics, CNN, Cartoon Network, HGTV, Food Network, the Turner Networks, TNT, TBS, Eurosport, Magnolia, TLC, Animal Planet, ID, and many more will be part of the “pure play” content company, which will own one of the world’s largest libraries with nearly 200,000 hours of iconic programming. It will also bring together over 100 of the world’s most cherished, popular, and trusted brands under one global portfolio, including HBO
The new company will be able to invest more in original content and programming, expand opportunities for under-represented storytellers and independent creators, provide customers with innovative video experiences and points of engagement, and encourage more investment in high-quality, family-friendly nonfiction content.
Discovery President and CEO David Zaslav, along with a best-in-class management team and top operational and creative leadership from both firms, would oversee the proposed new company.
The current numerous classes of shares in Discovery will be consolidated into a single class with a single vote per share.
The new company’s Board of Directors will be made up of 13 members, with AT&T appointing seven of them, including the chairwoman, and Discovery appointing six, including CEO David Zaslav.
“The combined firm will be one of the major worldwide direct-to-consumer streaming platforms as a result of this arrangement, which brings together two entertainment leaders with complementary content strengths.” With Discovery’s global footprint, it will assist HBO Max’s phenomenal growth and international debut, as well as provide efficiencies that can be re-invested in generating more excellent content to give people what they want. This is an opportunity for AT&T stockholders to unlock wealth and become one of the best-capitalized broadband firms, focused on investing in 5G and fiber to address considerable, long-term connection demand. AT&T owners will keep their shares in the world’s top communications firm, which pays a generous dividend. They’ll also get a piece of the new company, a worldwide media powerhouse with the potential to become one of the world’s best streaming platforms.”
“We consistently come back to the same simple and powerful strategic idea during my many meetings with John: these assets are better and more valuable combined.”
It’s incredibly thrilling to bring together such legendary franchises, world-class journalism, and historic businesses under one roof and unlock so much value and possibilities.
We believe that everyone wins…consumers with more diverse choices, talent and storytellers with more resources and compelling pathways to larger audiences, and shareholders with a globally scaled growth company committed to a strong balance sheet that is better positioned to compete with the world’s largest streamers. With a library of cherished IP, dynamite management teams, and global expertise in every market in the world, we believe that everyone wins…consumers with more diverse choices, talent and storytellers with more resources and compelling pathways
We’ll write a new chapter with WarnerMedia’s creative and brilliant workforce, as well as these magnificent assets, which are built on a nearly 100-year tradition of the world’s most wonderful storytelling.
That will be our sole mission: to tell the most incredible stories while having a great time doing it.”
The merger will be carried out through a Reverse Morris Trust, in which WarnerMedia will be spun out or split off from AT&T’s stockholders via dividend, exchange offer, or a combination of both, and united with Discovery at the same time. For AT&T and its shareholders, the transaction is expected to be tax-free.
AT&T will receive $43 billion (subject to adjustment) in cash, debt securities, and WarnerMedia’s retention of certain debt in conjunction with the spin-off or split-off of WarnerMedia.
The new business plans to keep its investment grade rating and use the merged company’s large cash flow to swiftly de-lever to around 3.0x within 24 months, with a new, longer-term gross leverage target of 2.5x-3.0x. For the purposes of supporting the distribution, WarnerMedia has acquired fully committed financing from JPMorgan Chase Bank, N.A. and Goldman Sachs & Co. LLC affiliates.
The deal is expected to completion in mid-2022, subject to Discovery shareholders’ approval and standard closing circumstances, such as regulatory approvals. AT&T stockholders are not compelled to vote. Dr. John Malone and Advance have made agreements to vote in support of the acquisition.
AT&T’s Preliminary Financial Profile Following the Closing of the Transaction; Capital Allocation Focused Total Return Strategy; Dividend Payout Ratio1 is expected to be in the low 40s after the close.
AT&T expects its remaining assets to yield the following financial trend from 2022 to 2024 after closing and on a pro-forma basis:
- Financial flexibility has been significantly improved to drive shareholder returns, including:
- Increased capital expenditure is expected for 5G and fiber internet deployments.
- Once the purchase is completed, the corporation forecasts yearly capital expenditures of roughly $24 billion.
- By the end of 2023, AT&T anticipates its 5G C-band network to cover 200 million people in the United States. By the end of 2025, the corporation hopes to have covered 30 million client locations with fiber.
- Significant debt reduction: After the acquisition closes, expect Net Debt to Adjusted EBITDA5 to be in the 2.6x range, and less than 2.5x by year end 2023.
- Attractive dividend adjusted to reflect WarnerMedia’s payment to AT&T shareholders. AT&T forecasts an annual dividend payout ratio of 40 percent to 43 percent on expected free cash flow1 of $20 billion or more after closing, subject to AT&T Board approval.
- Once Net Debt to Adjusted EBITDA is less than 2.5x, the option to buyback shares is available.
AT&T received financial advice from LionTree LLC and Goldman Sachs & Co. LLC, as well as legal advice from Sullivan & Cromwell LLP.
Discovery worked with financial advisors Allen & Company LLC and J.P. Morgan Securities LLC, as well as legal advisor Debevoise & Plimpton LLP. The Independent Directors of Discovery were advised by Perella Weinberg Partners and Wachtell Lipton, Rosen & Katz.
Advance received financial advice from RBC Capital Markets and legal advice from Paul, Weiss, Rifkind, Wharton & Garrison LLP.
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How long do you have to hold a stock to get the dividend?
You must keep the stock for a certain number of days in order to earn the preferential 15 percent tax rate on dividends. Within the 121-day period around the ex-dividend date, that minimal term is 61 days. 60 days before the ex-dividend date, the 121-day period begins.
What is Coca Cola dividend?
For than a century, Coca-Cola has been quenching people’s thirst. The company manufactures and sells its beverages all around the world, with a focus on restaurants, movie theaters, and theme parks. The technique backfired during the coronavirus outbreak, but it’s now paying off as economies recover.
Coca-Cola pays a quarterly dividend of $0.42 per share, resulting in a dividend yield of 3.07 percent. The company’s dividend payout ratio, or the percentage of earnings paid out as dividends, has risen to over 100% in recent years. In particular, a dividend payout ratio of more than 100% is unsustainable in the long run since the company will eventually run out of cash.
Is AT&T a safe stock to buy?
AT&T (T) is one of the most well-known wireless phone companies in the United States. So far, the telecom and media conglomerate has had a better year than previous year. Even after recovering nearly 30% from the lows of the coronavirus bear market, AT&T stock remained down over 26% in 2020. So far in 2021, the stock has lost 14% of its value. On the plus side, despite the low interest rate environment, the company retains a high 8.4% annualized dividend yield. Additionally, when stock markets become volatile, telecom companies are sometimes seen as a safe haven. Should AT&T stock be purchased by investors?
Does ATT still own WarnerMedia?
AT&T announced a $43 billion deal to spin off WarnerMedia, merge it with Discovery, and create a new global content powerhouse with scripted and unscripted programs in mid-May. AT&T plans to use the proceeds from the sale of its entertainment division to pay down debt and focus on its connectivity business.
