AT&T's CNG Vehicles Touch 8000 Mark - Analyst Blog

AT&T Inc. (T) recently announced the deployment of its 8000^th compressed natural gas (CNG) vehicle, consistent with its plan of deploying 15,000 alternative fuel vehicles by 2018. 

Apart from CNG vehicles, AT&T currently owns hybrid electric, all electric and extended-range electric vehicles, representing a total fleet of more than 10,000 alternative fuel vehicles, spread across 43 states, Puerto Rico and the District of Columbia.

The company’s commitment toward maintaining a fuel efficient fleet represents its efforts to not only support environmental causes but also improve its cost structure and increase profitability.

AT&T strategic initiatives to improve its cost structure have helped the company to consolidate its balance sheet.  The company has the strongest balance sheet in the industry with net debt-to-adjusted EBITDA ratio of 1.74 times at the end of first-quarter 2014.

A solid balance sheet facilitates investment plans and strategic acquisitions, while also allowing return of substantial value to shareholders through attractive dividends and share buybacks. In 2013, the company repurchased 366 million shares worth $13.0 billion. In the first quarter, the company repurchased another 37 million shares for $1.2 billion.

Since 2012, the company has bought back nearly 737 million shares, representing 12% of its outstanding shares. In addition, AT&T paid nearly $10 billion in dividend payments in 2013. During the first quarter of this year, the company returned approximately $2.4 billion to its shareholders through dividend payments.

In Dec 2013, the company raised its dividend by 2.2% to 46 cents from 45 cents paid earlier, representing the 30^th consecutive annual increase in quarterly dividend. On an annualized basis, the dividend payment amounts to $1.84, up from $1.80. In the past two years, the company’s shareholder return remains foremost in the industry with more than $45 billion returned in total through dividends and share repurchases.

Going forward, the company also expects to invest $21 billion in infrastructural development in 2014 despite maintaining a strong and free cash flow estimate of $11 billion in 2014.  AT&T currently has a Zacks Rank #3 (Hold).

Other stocks

Other stocks worth considering within this sector are Level 3 Communications Inc. (LVLT), TalkTalk Telecom Group PLC (TKTCY) and Telstra Corp. (TLSYY). All these stocks currently carry a Zacks Rank  #1 (Strong Buy).

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