It's that time again for AT&T (NYSE: T) shareholders. AT&T recently declared its most recent quarterly dividend. On Nov. 3, the company will pay out $0.46 per share to shareholders of record at the close of business on Oct. 10. The quarterly dividend was raised to $0.46 -- up from $0.45 -- with the first payout of the year, in February.

AT&T is one of the premier dividend-paying stocks to choose from. It currently ranks as the highest-yielding stock in the Dow Jones Industrial Average, with a hefty 5.2% yield.

High current yield, low dividend growth
As investors well know, AT&T uses the bulk of its cash flow to reward shareholders with a high dividend. Even better, AT&T has a long track record of raising its payout over time. AT&T has increased its dividend for 30 years in a row, which demonstrates its commitment to returning a large portion of its cash flow to shareholders. AT&T typically raises its dividend at the end of the calendar year, so investors should look forward to another increase come December.

How much AT&T can, and will, raise its dividend is another question. It's worth considering that AT&T's dividend growth has slowed a bit during the past few years. AT&T's dividend bumps have been in the amount of $0.01 per share for the past six raises. The reason for this is that AT&T is a megacap that has reached the full maturity stage -- meaning it doesn't have much room for growth. AT&T's revenue grew just 1.9% in 2013. Free cash flow actually declined last year, from $19.7 billion in 2012 to $13.8 billion in 2013, due to higher capital expenditures and adjustments for pension liabilities.

This has put a limit on how much the company can raise its dividend, because AT&T already distributes much of its free cash flow. AT&T distributed 70% of its free cash flow to investors last year.

This trend has actually worsened to start 2014. Free cash flow totaled $5.2 billion during the first six months of this year, which is down from $8 billion through the same period last year. This was due to a $2 billion increase in capital expenditures during this time. Much of this has to do with AT&T's Project VIP, which was initiated two years ago as a massive, $14 billion capital spending plan to build out its IP and 4G LTE networks across the country.

Through the first half of 2014, AT&T paid $4.7 billion worth of dividends, meaning the company distributed 91% of its free cash flow.

Boiling it down
The major takeaway is that buying AT&T stock serves different purposes, depending on what type of investor you are. AT&T is perfectly suited for investors who need income right now, such as those in or nearing retirement. As previously mentioned, AT&T yields a nice 5.2%. Finding a profitable stock with that high of a yield is difficult. Typically, most stocks with that high of a yield are ones whose stock prices have declined significantly because they are in dangerous financial shape. AT&T generates more than enough cash flow to sustain its payout, and offer a modest increase every year.

Dividend growth investors may find AT&T a bit lacking. That's because its free cash flow has declined in recent periods due to significant capital spending designed to expand its network. AT&T is busily building out its U-Verse capabilities. All in all, AT&T distributes almost all of its cash flow, which means investors should expect another $0.01-per-share increase in its dividend come December. Once AT&T's massive spending initiatives are finalized, there may be room for greater dividend bumps down the road if future cash flow growth takes hold.

AT&T serves a valuable purpose for investors who need current income, and it's about to send a nice chunk of change to those investors. AT&T will pay its $0.46 per share dividend soon, and investors interested in the payout need to buy in no later than Oct. 7.

[Editor's note: Corrected article to reflect the proper date (10/7/14) by which shares must be bought to qualify for a quarterly dividend payout.]