A high-yielding stock can be a valuable asset in your portfolio because it can generate a lot of recurring income. Investors can often find great dividend stocks in the telecom sector, where companies typically have a lot of recurring and consistent revenue themselves since demand for what they offer is generally stable.
NYSE: T
Key Data Points
AT&T (T 1.86%) is an excellent example of that. The company is a leader in the telecom industry, and it offers a yield of 6.1% at the current share price. Every quarter, the stock pays a dividend of $0.2775, which amounts to $1.11 annually.
To collect $1,000 in dividends in a year, you would need to own about 901 shares of AT&T, which would cost $16,220 or so at the current share price of around $18.
The company had a long streak of hiking its payouts prior to the pandemic. Then it sharply reduced its dividend in 2022, but that was to adjust for its spinoff of WarnerMedia, an investment that simply didn't work out. Now, with AT&T focusing solely on its core businesses, it's a safer and more stable investment.
This year, the company projects that its free cash flow will total at least $17 billion, which is far more than the $8.1 billion it currently pays in dividends per year. At this rate, it's not so much a question of if the dividend is safe but rather whether management might increase its dividend in the near future.
With strong financials to support a higher quarterly payment, AT&T is one of the best dividend stocks you can buy today.
