After 2 years of misery, Ma Bell breaking out

Published Tue, Jun 23 201511:23 AM EDT

This bull market hasn't been kind to AT & T . Its shares are down more than 9 percent in two years The company, known affectionately as "Ma Bell" over the years, was tossed out of the Dow Jones industrial average in March, a benchmark it first entered nearly a century earlier. After the removal, the stock fell to near its lowest level in three years. Well things may be finally looking up. Three Wall Street analysts said this month that the misery has gone on long enough, and they upgraded the stock. Two of those upgrades occurred Tuesday, from UBS and Barclays. Here's why they could be right. First, the jump this month caused the stock to break through a long-term downward trend line that's kept a cap on the shares for two years. If it can keep this momentum through the end of the month, this could be a reversal in trend, according to the chart analyst crowd. But it's not just price action that Wall Street likes. Analysts cite a dividend yield swelling to more than 5 percent because of the recent price drop as a reason to pick up the shares here. Read More Uncertainty for stocks remains. What to buy They also cite as a catalyst the closure of AT & T's DirecTV purchase expected soon, an acquisition whose synergies are being undervalued by the rest of Wall Street. John Hodulik of UBS, who upgraded the stock to "buy," said this in a note to clients: "We believe the near-term financial benefits of AT & T's acquisition of DirecTV are underappreciated by the market. AT & T's dividend payout should improve to 70 percent post close from 97 percent in 2014 and remain in the mid-60s range in 2016-17E, providing room for sustainable dividend growth going forward." The dividend payout ratio is the amount of earnings paid out in the form of a dividend. Barclays' Amir Rozwadowski, who upgraded the stock as well on Tuesday, told clients: "Possible earnings power in excess of $3.00 per share should support gradual share appreciation without the need for material multiple expansion. Coupled with an increasingly secure 5.4 percent yield, this supports our new relative OW (overweight) rating." Ironically, when the index committee at Dow Jones said in March it would kick out AT & T for Apple , it may have marked an emotional low for the stock. This is a trend seen time and time again with stocks removed from the Dow. Stocks such as Alcoa , Hewlett-Packard and Bank of America surged the year after their Dow exodus. —With reporting by Michael Bloom

An AT&T store in New York.

Scott Mlyn | CNBC

This bull market hasn't been kind to AT&T.

Its shares are down more than 9 percent in two years

The company, known affectionately as "Ma Bell" over the years, was tossed out of the Dow Jones industrial average in March, a benchmark it first entered nearly a century earlier.

After the removal, the stock fell to near its lowest level in three years.

Well things may be finally looking up. Three Wall Street analysts said this month that the misery has gone on long enough, and they upgraded the stock. Two of those upgrades occurred Tuesday, from UBS and Barclays.

Here's why they could be right.