Wells Fargo (NYSE:WFC) and AT&T (NYSE:T) barely rose from the March lows. Both stocks faced excessive selling pressure for different reasons. Is it time to bet that these dividend-paying stocks recovered? Both stocks trade at modest price-to-earnings multiples.
Debt levels are uncomfortably high but are manageable.
Investors cannot have it both ways. They bought up stocks on the S&P 500 (SPY) to bet on an economic recovery. Yet U.S. Federal Reserve Chairman Jerome Powell warned that the recession will not end until next year. Banks like Wells Fargo need a healthy economy to grow. At these levels, WFC stock is attractive.
AT&T never hesitated in paying its quarterly dividend. It will continue doing so for the rest of the year, even though the entertainment unit, WarnerMedia, is losing money. Those losses are only temporary. As studios reopen, blockbuster movies will bring plenty of revenue for the telecom giant.
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Subscriptions for AT&T’s HBO Max grew during the lockdown. With the businesses reopening, people will not rush out to shop and go out. They will continue to stream content on HBO Max.
Though AT&T’s debt levels will always worry investors, managing it is not a problem. The dividend is safe for now and the firm may raise debt if it ever needs more cash.