AT&T (T 1.02%) has long been a solid dividend stock to own. But investors have been losing trust in the stock amid rising interest rates, inflation, and a poor economic outlook. Year to date, it has fallen by 17%. And as a result of its declining share price, the stock's yield is up to around 7.5%. 

At first glance, it may appear to be a payout that's too good to be true. However, given AT&T's most recent quarterly results, that may not be the case.

AT&T boosted its cash-flow guidance

The big question mark around AT&T's dividend was always its cash flow. If it could meet its target of $16 billion in free cash for the year, that would mean the dividend should remain safe. The problem is it didn't always appear that way. In the first quarter, for example, AT&T reported free cash flow of only $1 billion for the period ending March 31. The following quarter, free cash flow improved to $4.2 billion but cumulatively totaled $5.2 billion and was still less than half of the $16 billion the telecom company was forecasting for the year. 

But on AT&T's most recent earnings report, which came out on Oct. 19, the company's quarterly cash flow totaled $5.2 billion for the period ended in September. And the results were encouraging enough that the business upgraded its forecast, now projecting free cash to total $16.5 billion for the full year. AT&T pays $8.1 billion in dividends over the course of a full year. With more than double that in free cash flow, the business is in a good position to pay and potentially even increase its already high dividend. CEO John Stankey credited the company's "best-in-class 5G and fiber connectivity" for its growth and strong results this year.

The business is still growing

AT&T isn't a fast-growing business by any stretch, but the top line is going in the right direction. Last quarter, revenue of $30.4 billion was up by 1% from the same period a year ago. And for the 15th straight period, the company reported at least 200,000 net additions to its fiber business. AT&T Fiber now has more than 8 million subscribers, which is double the number it had less than four years ago.

Overall, the company is doing well with the only soft spot appearing to be its business wireline unit, where revenue of $5.2 billion was down 7.9%. But that wasn't enough to overshadow the company's strong performance in other areas, such as mobility, where sales of $20.7 billion grew by 2%.

AT&T still faces risks, however

Despite the encouraging results, there are still reasons investors may be hesitant to buy AT&T's stock. The first is its debt load. As of the end of last quarter, AT&T reported total debt of $138 billion. While that's down from the $143.3 billion in debt it reported in the previous quarter, it's largely unchanged from the first quarter, when AT&T reported $137.5 billion in total debt. While the company remains committed to reducing its debt, investors may not be thrilled with the progress thus far.

Meanwhile, there could be more debt coming. Earlier this year, a report from The Wall Street Journal found that there are thousands of cables across the U.S. laid by major telecom companies, including AT&T, that are covered in lead. The potential cleanup costs could run in the billions of dollars. The one positive for investors is that even if the bill does end up on the large side, the process and the payout of such obligations could take years; it likely won't be a big, one-time outflow of cash.

Should you buy AT&T stock?

AT&T's stock is currently trading at just 6 times its estimated future earnings and could be a bargain buy. The company isn't out of the woods as it still has a significant debt load, but it certainly looks much safer than it did just a few months ago given its strong free cash flow. That suggests the dividend remains sustainable even at the stock's high yield. 

This is a top telecom company that routinely earns top marks for customer service. For income investors, now could be an excellent time to load up on this dividend stock as it remains near its 52-week low.