Please ensure Javascript is enabled for purposes of website accessibility
Search
Log In Help Join The Motley Fool
The Motley Fool
Our Services
Premium Services
Stock Advisor
Our Flagship Service
Return
393%
S&P Return
115%
Rule Breakers
High-growth Stocks
Return
203%
S&P Return
97%
Returns as of 03/29/2023
View Our Services
Investing 101
  • How to Invest Money
  • What to Invest In
  • How to Invest in Stocks
  • How to Invest in Index Funds
  • How to Invest in ETFs
  • How to Invest in Real Estate
Best Accounts
  • Best Stock Brokers
  • Best Brokers for Beginners
  • Best IRA Accounts
  • Best Roth IRA Accounts
  • Best Options Brokers
  • Best Crypto Apps
Stock Market Basics
  • Stock Market 101
  • Types of Stocks
  • Stock Market Sectors
  • Stock Market Indexes
  • S&P 500
  • Dow Jones
  • Nasdaq Composite
Premium Services
Stock Advisor
Our Flagship Service
Return
393%
S&P Return
115%
Rule Breakers
High-growth Stocks
Return
203%
S&P Return
97%
Returns as of 03/29/2023
View Our Services
Stocks
  • Growth Stocks
  • Value Stocks
  • Dividend Stocks
  • Small Cap Stocks
  • Large Cap Stocks
  • Blue Chip Stocks
Industries to Invest In
  • Consumer Goods
  • Technology
  • Energy
  • Healthcare
  • Financial
  • Cryptocurrency
  • NFTs
News
  • Top Stocks to Buy in 2023
  • Stock Market News
Getting Started
  • Retirement 101
  • Why to Start Saving Now
  • Types of Retirement Accounts
  • 401k Basics
  • IRA Basics
  • HSA Basics
Planning for Retirement
  • How Much Do I Need to Retire?
  • When To Retire
  • Factoring in Social Security
  • What is the Full Retirement Age?
  • Investing for Retirement
  • Retirement Strategies
Retired: What Now?
  • Retiring in 2023
  • Withdrawal Strategies
  • Healthcare in Retirement
  • Taxes in Retirement
  • Estate Planning
Credit Cards
  • Best Credit Cards
  • Best Cash Back Cards
  • Best Balance Transfer Cards
  • Best Travel Credit Cards
  • Best 0% Credit Cards
  • Best Rewards Cards
  • Best Cards for Bad Credit
Bank & Loans
  • Best Savings Accounts
  • Best Checking Accounts
  • Best CD Rates
  • Best Personal Loans
  • Best Debt Consolidation Loans
Homebuying
  • Best Mortgage Lenders
  • Best Mortgage Refi Lenders
  • Best Lenders for First-time Buyers
  • Best FHA Mortgage Lenders
  • Current Mortgage Rates
Guides
  • Credit Cards 101
  • Bank Accounts 101
  • Home Loans 101
  • Pay Off Debt
  • Increase Your Credit Score
Our Purpose:
To make the world smarter, happier, and richer.

Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.

Who Is the Motley Fool?
  • About Us
  • Investing Philosophy
  • Reviews
  • The Motley Fool Foundation
  • Newsroom
  • Contact Us
  • Publishing Standards
Fool Podcasts
  • Podcasts Home
  • Motley Fool Money
  • Rule Breaker Investing
Social Media
  • Facebook
  • Twitter
  • YouTube
  • Discussion Boards
  • CAPS - Stock Picking Community
Other Services
  • The Ascent
Latest Stock Picks
Search
  • Our Services
    • Investing 101
      • How to Invest Money
      • What to Invest In
      • How to Invest in Stocks
      • How to Invest in Index Funds
      • How to Invest in ETFs
      • How to Invest in Real Estate
      Best Accounts
      • Best Stock Brokers
      • Best Brokers for Beginners
      • Best IRA Accounts
      • Best Roth IRA Accounts
      • Best Options Brokers
      • Best Crypto Apps
      Stock Market Basics
      • Stock Market 101
      • Types of Stocks
      • Stock Market Sectors
      • Stock Market Indexes
      • S&P 500
      • Dow Jones
      • Nasdaq Composite
      Premium Services
      Stock Advisor
      Our Flagship Service
      Return
      393%
      S&P Return
      115%
      Rule Breakers
      High-growth Stocks
      Return
      203%
      S&P Return
      97%
      Returns as of 03/29/2023
      View Our Services
    • Stocks
      • Growth Stocks
      • Value Stocks
      • Dividend Stocks
      • Small Cap Stocks
      • Large Cap Stocks
      • Blue Chip Stocks
      Industries to Invest In
      • Consumer Goods
      • Technology
      • Energy
      • Healthcare
      • Financial
      • Cryptocurrency
      • NFTs
      News
      • Top Stocks to Buy in 2023
      • Stock Market News
      Premium Services
      Stock Advisor
      Our Flagship Service
      Return
      393%
      S&P Return
      115%
      Rule Breakers
      High-growth Stocks
      Return
      203%
      S&P Return
      97%
      Returns as of 03/29/2023
      View Our Services
    • Getting Started
      • Retirement 101
      • Why to Start Saving Now
      • Types of Retirement Accounts
      • 401k Basics
      • IRA Basics
      • HSA Basics
      Planning for Retirement
      • How Much Do I Need to Retire?
      • When To Retire
      • Factoring in Social Security
      • What is the Full Retirement Age?
      • Investing for Retirement
      • Retirement Strategies
      Retired: What Now?
      • Retiring in 2023
      • Withdrawal Strategies
      • Healthcare in Retirement
      • Taxes in Retirement
      • Estate Planning
    • Credit Cards
      • Best Credit Cards
      • Best Cash Back Cards
      • Best Balance Transfer Cards
      • Best Travel Credit Cards
      • Best 0% Credit Cards
      • Best Rewards Cards
      • Best Cards for Bad Credit
      Bank & Loans
      • Best Savings Accounts
      • Best Checking Accounts
      • Best CD Rates
      • Best Personal Loans
      • Best Debt Consolidation Loans
      Homebuying
      • Best Mortgage Lenders
      • Best Mortgage Refi Lenders
      • Best Lenders for First-time Buyers
      • Best FHA Mortgage Lenders
      • Current Mortgage Rates
      Guides
      • Credit Cards 101
      • Bank Accounts 101
      • Home Loans 101
      • Pay Off Debt
      • Increase Your Credit Score
    • Who Is the Motley Fool?
      • About Us
      • Investing Philosophy
      • Reviews
      • The Motley Fool Foundation
      • Newsroom
      • Contact Us
      • Publishing Standards
      Fool Podcasts
      • Podcasts Home
      • Motley Fool Money
      • Rule Breaker Investing
      Social Media
      • Facebook
      • Twitter
      • YouTube
      • Discussion Boards
      • CAPS - Stock Picking Community
      Other Services
      • The Ascent
      Our Purpose:
      To make the world smarter, happier, and richer.

      Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.

  • Log In
  • Help
  • Join The Motley Fool
Latest Stock Picks
Free Article
Join Over Half a Million Premium Members And Get More In-Depth Stock Guidance and Research

How Safe Is AT&T's Dividend?

By Dan Caplinger – Aug 13, 2017 at 10:48AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

NYSE: T

AT&T

AT&T Stock Quote
Market Cap
$133B
Today's Change
Arrow-Thin-Down
(1.50%) $0.28
Current Price
$19.00
Price as of March 29, 2023, 4:00 p.m. ET

The telecom giant has a long history of strong dividends, but will rising competition threaten its future?

The telecom industry has been among the most generous sectors of the market in terms of sharing profits with shareholders through dividends, and industry giant AT&T (T 1.50%) is no exception. For a long time, AT&T has been among the top dividend stocks in the market, paying investors solid returns on huge investments in network infrastructure. More recently, though, rising competition in the wireless telecom industry has put pressure on AT&T and its peers, and some investors fear that a hit to the company's dividend might follow in the future. The following analysis looks at AT&T to see whether investors can rely on its quarterly payout going forward.

Dividend stats on AT&T

 

 

Current Quarterly Dividend Per Share

$0.49

Current Yield

5.1%

Number of Consecutive Years With Dividend Increases

33 years

Payout Ratio

92%

Last Increase

January 2017

Source: Yahoo! Finance. Last increase refers to ex-dividend date.

A strong dividend yield

AT&T's high dividend yield satisfies many income investors, but those who are more conservative can get nervous about a yield that's too high. Other companies in the telecom space have had to reduce or even eliminate their dividends recently after having sported extremely high yields, and once-burned income investors want to make sure they don't repeat that experience.

One sign of stability is that AT&T's yield has stayed in a consistent range for years. The yield has gone as high as 6% and as low as just over 4% since the early 2010s, mostly following the ups and downs of the stock price. With the current figure near the midpoint of its range, investors can feel at least somewhat more comfortable that AT&T is in well-charted territory as far as dividend yields are concerned.

Payout ratio

AT&T has a payout ratio above 90%, which at first glance might appear troublesome. The challenge that often comes up in evaluating telecom stocks is that companies tend to have extremely large depreciation and amortization costs that tend to depress earnings compared to available free cash flow. As a result, telecom companies can sustain payout ratios well over 100% for extended periods of time simply because there's so much downward pressure on reported earnings due to non-cash items.

myAT&T logo.

Image source: AT&T.

AT&T's payout ratio has fluctuated greatly over the years, usually because of periods of one-time charges or benefits that reduce or inflate earnings. The current figure is consistent with what AT&T has seen over time, and investors just need to watch closely to make sure that nothing happens to make it climb substantially going forward.

Dividend growth

AT&T has a track record of consistent dividend growth. For 33 straight years, AT&T has raised its dividend payments each year, making it a Dividend Aristocrat. Those boosts have come even during times of great disruption for the telecom industry, including the years in which AT&T and its rivals were spending tens of billions of dollars building out or improving their wireless networks.

T Dividend Chart

T Dividend data by YCharts. Note: Spike indicates one-time calendar-year timing issue.

AT&T's dividend growth isn't all that exciting, but it is consistent. January's 2% rise in quarterly payments is similar to what investors have seen in recent years. Over time, those small increases add up, making the stock predictable for those who focus on reliable dividends.

What's ahead for AT&T?

The biggest uncertainty that AT&T faces is what comes next for the telecom giant. Throughout the industry, carriers are fighting each other over unlimited data plans that threaten to narrow profit margin and take away a key driver of future growth. AT&T has already had to cut prices in response to competitive pressures, and further moves could be necessary if the price war continues.

Still, AT&T has ideas on where to go from here. The most important are its efforts in the media space, where it has already purchased DirecTV and is aiming to complete a takeover of Time Warner in the near future. By adding content, AT&T hopes to create an enclosed ecosystem with which it can woo subscribers, aiming to differentiate itself from other carriers. Companies throughout the media and entertainment space are looking at similar moves, however, and so investors can expect a tough fight ahead even if AT&T does get the Time Warner deal past all of its regulatory hurdles.

What to expect from AT&T's dividend

AT&T has a lot invested in its reputation among shareholders for safe, growing dividends, and the company will do what it can to protect and preserve that reputation. With major capital expenditures on the horizon, AT&T will once again have its resolve tested, but past experience suggests that the telecom giant will be reluctant to make any move that would disappoint investors on the dividend front.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Time Warner. The Motley Fool has a disclosure policy.

Stocks Mentioned

AT&T Stock Quote
AT&T
T
$19.00 (1.50%) $0.28

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

couple-counts-money
Better Bear Market Stock: AT&T vs. Apple
Telecommunication tower with connection points 5G
This High-Yield Dividend Stock Will Help You Sleep at Night
surprised shocked open mouth looking at phone (1)
If You Invested $10,000 in AT&T in 2000, This Is How Much You Would Have Today
CAD design engineering creation
3 Dividend-Paying Tech Stocks to Buy in March
business analyst trader stocks trends
Why AT&T, Fortinet, and TSMC Are No-Brainer Buys Right Now
393%

Our Most Popular Articles

A blue Tesla car driving on an open road
1 Stock-Split Stock Set to Soar 705%, According to Cathie Wood's Ark Invest
A digital rendering of computer chips, with one labelled AI
AI Could Be a $14 Trillion Opportunity by 2030 -- 3 Stocks You Can Buy to Take Advantage
Rivian-R1T-2022
Why Rivian Shares Popped Today
GettyImages-466489521
A Bull Market Is Coming: 1 Magnificent Growth Stock Down 64% to Buy Before It Skyrockets

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.

View Premium Services
The Motley Fool

Making the world smarter, happier, and richer.

  • Facebook Facebook
  • Twitter Twitter
  • Linked In LinkedIn
  • Pinterest Pinterest
  • YouTube YouTube
  • Instagram Instagram
  • Tiktok TikTok

Market data powered by Xignite.

About The Motley Fool

  • About Us
  • Careers
  • Research
  • Newsroom
  • Contact
  • Advertise

Our Services

  • Stock Advisor
  • Rule Breakers
  • Rule Your Retirement
  • The Ascent
  • All Services

Around the Globe

  • Fool UK
  • Fool Australia
  • Fool Canada

Free Tools

  • CAPS Stock Ratings
  • Discussion Boards
  • Calculators

Our Affiliates

  • Motley Fool Asset Management
  • Motley Fool Wealth Management
  • Motley Fool Ventures
  • Lakehouse Capital
  • 1623 Capital
  • Terms of Use
  • Privacy Policy
  • Disclosure Policy
  • Accessibility Policy
  • Copyright, Trademark and Patent Information
  • Terms and Conditions
  • Do Not Sell My Personal Information
Current