AT&T Inc (NYSE:T) is a true Dividend Rock Star. Its yield of 5.85% makes it one of the market’s top dividend payer. In the past ten years, AT&T has also grown its dividend from 1.6 to 2. Below, I have outlined more attractive dividend aspects for AT&T for income investors who may be interested in new dividend stocks for their portfolio. See our latest analysis for AT&T
What Is A Dividend Rock Star?
It is a stock that pays a stable and consistent dividend, having done so reliably for the past decade with the expectation of this continuing into the future. More specifically: Its annual yield is among the top 25% of dividend payers It consistently pays out dividend without missing a payment or significantly cutting payout Its dividend per share amount has increased over the past It is able to pay the current rate of dividends from its earnings It is able to continue to payout at the current rate in the future
High Yield And Dependable
The company’s dividend yield stands at 5.85%, which is high for Telecom stocks. But the real reason AT&T stands out is because it has a proven track record of continuously paying out this level of dividends, from earnings, to shareholders and can be expected to continue paying in the future. This is a highly desirable trait for a stock holding if you’re investor who wants a robust cash inflow from your portfolio over a long period of time.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. In the case of T it has increased its DPS from $1.6 to $2 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes T a true dividend rockstar. The company currently pays out 39.82% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect T’s payout to increase to 60.48% of its earnings, which leads to a dividend yield of around 5.99%. However, EPS is forecasted to fall to $2.83 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
Investors of AT&T can continue to expect strong dividends from the stock. With its favorable dividend characteristics, if high income generation is still the goal for your portfolio, then AT&T is one worth keeping around. However, given this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three essential factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for T’s future growth? Take a look at our free research report of analyst consensus for T’s outlook.
- Valuation: What is T worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether T is currently mispriced by the market.
- Other Dividend Rockstars: Are there strong dividend payers with better fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.