AT&T ( T -2.75% ) It is notable for its dividend payment, which is currently generating a yield of more than 5.5%. This represents one of the highest dividend yields available. S&P 500 , with a current yield of under 1.5%.
A significant factor influencing stocks in the telecommunications industry hefty yield it is the substantial dividend payout . Here is a brief overview of AT&T’s The focus is on the dividend and determining if its significant payout can be maintained in the long term.
AT&T distributes dividend payments of $0.2775 per share to its shareholders every quarter, which amounts to $1.11 annually. Close to 7.2 billion total shares of a company’s stock that are owned by shareholders The company distributes approximately $2 billion in payments. payments made every three months approximately $8 billion each year .
Despite being a substantial sum, the amount is within AT&T’s capability to handle. The telecommunications powerhouse is known for its strong cash flow generation. In the last quarter, it generated $9.1 billion in operational cash flow and $4.6 billion in free cash flow after accounting for capital expenditures and vendor finance payments. This enabled the company to have sufficient funds to cover its dividend payout of around $2 billion. in the period .
AT&T is using The company used its surplus cash, remaining after distributing dividends, to bolster its financial position. In the second quarter, the company decreased its net debt by $1.9 billion, and over the previous year, it reduced it by $5.1 billion. This has enabled the company to to gradually decrease it leverage ratio It aims to reduce its leverage ratio to approximately 2.5x by the first half of the upcoming year, down from its current level of about 2.9x.
The high leverage ratio of the company has raised doubts about the long-term viability of the dividend. AT&T had reduced its dividend by half in the beginning of 2022 as a result. spinoff established a media division to develop The company known as Warner Bros. Discovery. .
The company decided to keep more money on hand to pay off debt and support the expansion of its fiber and 5G operations. As AT&T’s debt ratio approaches its goal, its significant dividend appears secure for investors interested in a reliable income source.
