AT&T Inc.

“AT&T is a fairly priced leveraged utility generating $19-20B in annual free cash flow with stable demand characteristics, but earning returns near its cost of capital with $118B in net debt, negligible insider ownership, a catastrophic M&A legacy, and no credible compounding engine. Expected total returns of 6-9% annually (mostly from dividends) are adequate for income portfolios but do not compensate for the leverage risk and opportunity cost versus higher-quality businesses. Capital is better deployed elsewhere for long-term wealth creation.”