AT&T (T.US) cut its dividend in half after spinning off its media business, which investors call "the most unforgivable sin"

After AT&T (t.us) announced the merger of part of its business and the Discovery Channel (disca.us), the market believed that this was an exit after the failure of an ambitious investment. But investors are more concerned about the dividend that is about to be halved, and New AT&T plans to invest about $8 billion in free cash flow on the dividend, up from nearly $15 billion last year.

Asset manager David Bahnsen said cutting dividends was "the most unforgivable sin". "There are a lot of retirees who are counting on dividends," he said. That's exactly what we're managing our money for – to avoid cutting dividends. ”

Even during the pandemic, it has proven that companies are more willing to cut back on stock buybacks than dividends. Overall, dividend payouts for S&P 500 companies in the first quarter of 2021 were $138 billion — just 6 percent below pre-crisis levels and almost back to normal.

But AT&T CEO John Stankey said in an interview with the media that the decision on the dividend change was the right one. "The reset dividend will remain attractive relative to other dividend opportunities in the market," he said. Considering that the media spin-off will divest 35 percent of the company, as well as part of Directv's business, "when you change the size of the company, you have to resize the dividend." ”