AT&T Inc. (T), Verizon Communications Inc. (VZ), Windstream Holdings Inc (WIN): Four Reasons Investors Shouldn’t Feel Blue After These Results

Verizon grew high-speed subscribers at a faster rate, but the company reported a net loss in the wireline business for the quarter. Windstream Holdings Inc (NASDAQ:WIN) reported a 33% decline in EPS, while AT&T reported that wireline operating profit was down 15.8%, but $1.6 billion for the quarter. As you can see, other companies might grow faster or slower, but AT&T turned in the best profit performance.

These two reasons are obvious
Two of the most obvious reasons for investors to consider AT&T are well known and easy to recognize. First, AT&T has the best sustainable yield among the group. Verizon’s yield of 4.53% is lower than AT&T’s at 5.27%. While Windstream Holdings Inc (NASDAQ:WIN)’s yield of more than 12% would seem to be the best, it is far from sustainable.

If you look at the core cash flow (net income + depreciation – capital expenditures) of each company, AT&T has a reasonable payout ratio of 69.55% over the last six months. While this might seem a bit high, if the company can improve its wireless margins, this ratio should decrease from the extra cash flow. While Verizon’s payout ratio was just 27.52%, Windstream Holdings Inc (NASDAQ:WIN)’s ratio is much worse at 103.35%.

The second reason AT&T should be attractive, is AT&T’s commitment to retiring shares. The company retired 8.2% of their diluted shares in the last year. By comparison, Verizon and Windstream both saw their share count increase slightly.

When you get right down to it, AT&T offers a good yield and prospects for better growth and cash flow in the future. While Verizon is expected to grow faster, the company’s $130 billion acquisition of Verizon Wireless is likely to keep a lid on some of that growth. Unfortunately, Windstream’s debt-to-equity ratio of 9.37 makes the company a risky bet no matter how high the yield. As you can see, AT&T’s shareholders have nothing to feel blue about.

The article 4 Reasons Investors Shouldn’t Feel Blue After These Results originally appeared on Fool.com is written by Chad Henage.

Chad Henage owns shares of Verizon Communications (NYSE:VZ). The Motley Fool has no position in any of the stocks mentioned.

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