If the AT&T/T-Mobile deal collapses, it will be a blow for Ma Bell ... but not a complete disaster. AT&T is still a wireless giant.
NEW YORK (CNNMoney) -- Ma Bell's plan to buy T-Mobile may still technically be on life support. But make no mistake, AT&T's stock looks pretty dead.
That may not be a bad thing.
AT&T (T, Fortune 500) announced last week that it is temporarily pulling its application for merger approval before the Federal Communications Commission. That move comes as the FCC and Department of Justice have both raised questions about the deal.
Ma Bell also last week said it was prepared to take a $4 billion accounting charge in the fourth quarter to cover the required break-up fee payment to T-Mobile parent Deutsche Telekom if the merger falls apart.
If AT&T has to pull the plug on the deal -- leaving that pretty T-Mobile spokesgirl looking for another corporate gentleman caller (paging Sprint (S, Fortune 500)!) -- it may be tougher for Ma Bell to compete as effectively with its top rival Verizon (VZ, Fortune 500).
But analysts said that as long as AT&T keeps paying that big, fat dividend, investors may not care. AT&T's annual dividend is $1.72 a share. That works out to a yield of nearly 6.2%.
To put that in comparison, it's more than triple the puny 2% or so that you get from holding onto a 10-year Treasury bond. And despite all the problems facing Ma Bell -- slow growth, more competition, and a relative paucity of spectrum for its 4G network, to name a few -- it looks like AT&T is a safer bet than the U.S. government.
It costs AT&T about $10.2 billion to pay its annual dividend to all its shareholders. That's a lot of money. But consider that AT&T generated $12.4 billion in free cash flow in just the first nine months of the year.
So while not being able to buy T-Mobile would be a blow, it's not significant enough to cause any questions about the safety of the dividend.
"Recent events have to make you take a fresh look at things. This is another hurdle," said Joe Bonner, an analyst with Argus Research in New York. "But the dividend is very juicy and AT&T's cash flow is not in any danger right now. You'd have to extrapolate far in the future before that happens."
As long as AT&T has the dividend, it's easy to forgive some of its other shortcomings. No more Apple (AAPL, Fortune 500) iPhone exclusivity? Look at the dividend. Landline business continues to wither away? Did you see that dividend?
Comcast (CMCSA, Fortune 500), DirecTV (DTV, Fortune 500) and other broadband video providers making life more difficult for the telecoms? Have I mentioned that Ma Bell pays a ginormous dividend?
For existing AT&T shareholders, it's no secret that the company is not an earnings momentum story. Analysts are forecasting annual profit growth of just 3% a year, on average, for the next few years.
But a stock that goes nowhere can still get you a 6% return thanks to the yield. That's not bad in any market, let alone one as rocky as this.
AT&T also trades at a discount to Verizon -- which admittedly has better growth prospects. Ma Bell is currently at about 11 times 2012 earnings estimates while Verizon is valued at 14 times next year's profit forecasts.
So there may be a (pardon the telecom pun) disconnect here -- especially since the T-Mobile purchase was not a make-or-break deal for the company. AT&T still has more than 100 million wireless subscribers.
"The valuation is pretty interesting," said Steve Clement, an analyst with Pacific Crest Securities in Portland, Ore.
"Without the T-Mobile assets, AT&T will still need to buy spectrum to accommodate continued traffic growth, but that's not a major issue for the near-term," he added. "AT&T still has a strong position in the wireless industry without T-Mobile."
That's why any long-term, "buy and hold" investors -- there's at least one still out there, right? -- don't need to panic.
This stock isn't likely to do well enough to vault you from the 99% to the 1%. But there is something comforting about that dividend.
"Investors generally assumed the T-Mobile deal was not going to go through for a couple of months now, and that clearly is a disappointment," said Christopher King, an analyst with Stifel Nicolaus in Baltimore. "But I have a buy rating on it and it's mostly because of the dividend."
Best of StockTwits ... and Belgian waffles. Monday's ferocious move up for stocks had people talking over on StockTwits. Unsurprisingly, some investors are skeptical.
gtotoy: Bear market rallies are the MOST vicious, most PROFITABLE and FASTEST rallies there are!
stevenplace: Friendly reminder that large % up days are characteristic of bear market rallies
Good point. Not sure if this is really a bear right now though. But investors have to be nimble.
StockSage1: Throw your preconceived notions out the window, anything can happen in this market - moves continue to be larger than most expect.
Agreed. "Volatility" is undoubtedly the investing word of the year for 2011.
Finally, noticing that the ETF of a certain Flemish-Dutch region (EWK) was up 5%, I asked Twitter followers to identify the following movie quote: "Uh, a big record just broke in Belgium."
My CNNMoney colleague Chris Isidore was first to correctly ID it as Matt Dillon in "Singles." We sit across from each other and often talk movies. So I feel badly that he "won" since he has a certain advantage.
But I feel even worse because I discovered after issuing the challenge that I already gave the same one almost exactly a year ago! That column was about RIMM. The headline? "The BlackBerry is dead! Or is it?"
I guess some things haven't changed over the past year. Except the quality of my memory.
The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, and Abbott Laboratories, La Monica does not own positions in any individual stocks. 
