How Much Could You Lose In AT&T Stock After CPI?
Our big story on inflation: Inflation Is Back. Is A Stock Market Crash Next?
A follow-up to How Much Could You Lose In AT&T Stock? (Oct 29).
On November 2 the AT&T dividend landed in brokerage accounts: 27.75 cents a share, or $277.50 for every 1,000 shares. For a retiree, that deposit is the whole reason to own the stock. Eight days later October’s inflation report came in hot, prices up 0.4% against 0.3% expected, and futures raised the odds of a bigger, half-point Fed hike in December. The better question, which we’ll come back to: what’s your plan for that income, whatever the Fed does?
AT&T closed Thursday at $22.18, 24% below its 52-week high and down 9.4% over the past year, dividends included. At $1.11 a year in dividends, that’s a yield of about 5.0%. When we asked two weeks ago how much you could lose, the answer was its worst fall since 2007: in the 2008-09 crisis, AT&T fell 45%.
That 45% is the income decision a hot CPI forces. For a seven-figure investor, a $200,000 AT&T stake pays $10,000 a year but could lose $90,000 in a 2008 repeat. Hold or trim? A Trefis partner firm can weigh it in a free 30-minute call.
Why Does A Hot CPI Hit AT&T?
Yield and debt. The 10-year Treasury yield rose to 5.10% on Thursday, above AT&T’s dividend yield, and a bond doesn’t come with a price war. Net debt was $149.8 billion after the EchoStar spectrum deal, and AT&T doesn’t expect leverage back at its 2.5x target until 2029. Each refinancing costs more as rates rise.
The business is fine: third-quarter revenue rose 5.3%, and AT&T kept its 2026 free-cash-flow outlook at $18 billion or more. Over the 12 months to September, free cash flow covered the dividend about 2.2 times. The pressure is wireless competition, with SpaceX planning to turn on a phone service in early 2028:
| Carrier (Nov 12 close) | 12 months, with dividends | Below 52-week high |
|---|---|---|
| Verizon $46.55 | +21.7% | 9.5% |
| AT&T $22.18 | −9.4% | 23.8% |
| T-Mobile $171.03 | −17.9% | 23.0% |
A 40-point gap in one industry. It ties to the inflation story we have followed all fall (war, immigration, taxes and AI as the fuels): squeezed families may shop their phone plans harder.
How Low Has AT&T Gone?
| Fall | AT&T | At $22.18 today |
|---|---|---|
| 2008-09 crisis | −44.9% | about $12 |
| May 2021-Jul 2023 (2022 dividend cut) | −37.0% | about $14 |
| Feb-Mar 2023 bank crisis | −9.8% | about $20 |
The 2008 fall took 37.6 months to recover from its low. The 2021-23 fall included the 2022 WarnerMedia spin, after which AT&T has paid 27.75 cents a quarter.
We didn’t test AT&T itself on CPI days, but here’s the year after the 32 CPI days since 2018 when the S&P 500 fell 0.3% or more (29 have a full year since):
| 1 year after | Higher | Median |
|---|---|---|
| Utilities (XLU) | 22 of 29 | +13.0% |
| S&P 500 | 22 of 29 | +13.5% |
| Long Treasuries (TLT) | 10 of 29 | −8.4% |
Dividend stocks mostly came back; long bonds mostly didn’t.
What Can An Income Investor Do?
- Size it so 45% is survivable. A 3% target with a 4% ceiling: a 45% fall then costs about 1.4% of the portfolio.
- Name your price. Sell an April 2027 $20 put, backed by $2,000 of cash a contract. At Thursday’s close it paid about 81 cents a share (midpoint of the bid and ask), or $80.50 a contract. That makes your net cost $19.20, 13% below Thursday’s close, where the dividend would yield about 5.8%. If AT&T falls below $20, you may have to buy it at $20.
- Or add income on shares you hold. An April 2027 $24 covered call pays about 92 cents a share at Thursday’s close (midpoint of the bid and ask), or $92 a contract, and caps your gain near 8%.
- Skip the reactive move. Don’t sell income stocks after one hot print. The S&P’s CPI-day move matched its next year only 7 times in 29.
- Watch: the next dividend declaration, likely mid-December; the 10-year yield against AT&T’s 5.0%; the Fed on December 9 and November’s CPI on December 10.
What Should You Ask Next?
- Bonds after a hot CPI: is the safe half of 60/40 safe? (coming next)
- Verizon +22%, T-Mobile −18%: who’s winning the wireless price war? (coming next)
- Can AT&T cut its debt to 2.5x by 2029 if rates stay high? (coming next)
Is Your Income Plan Built For Higher Rates?
A hot print changes the odds, not the plan. If you have $1 million or more invested, get a second opinion on your income mix in a free 30-minute call with a Trefis partner firm.
For questions about this article or underlying research, email help@trefis.com.