AT&T (NYSE: T) has been on a recovery path. After years of poor strategic decisions, the telecom giant has refocused on its core business. Its stock has nearly doubled since mid-2023. But the big question is: Can this momentum last another year?
1. A Rough Start to the Decade
The early 2020s were not kind to AT&T. In the previous decade, the company moved away from its telecom roots. It spent heavily on DirecTV and Time Warner—ventures that ultimately failed. These moves led to large financial losses and a painful dividend cut after 35 years of consistent increases.
But the company has since reversed course. By selling off these non-core businesses, AT&T returned to focusing on wireless and fiber services. Investors seem to like the change. Since hitting a low in 2023, the stock has staged a strong comeback.
2. AT&T’s Business Today
Now, AT&T looks much more like its main rivals—Verizon and T-Mobile. Roughly 70% of AT&T’s revenue comes from its U.S. wireless segment. Around 25% comes from wireline services, which mostly serve businesses. Its Latin American operations contribute just over 3% of revenue.
While this sharper focus has helped, it’s clear that AT&T remains a mature company. It doesn’t offer the rapid growth many investors seek.
Still, its dividend is a bright spot. Since the 2022 cut, the company has held its annual payout steady at $1.11 per share. Even with the rising stock price, the dividend yield is around 4%—much higher than the S&P 500’s average of 1.3%.
AT&T’s free cash flow is expected to be about $16 billion in 2025. That’s down from nearly $18 billion in 2024, but it’s still more than enough to support the $8.4 billion dividend. There’s even room for possible increases in the future.
3. Financial Performance and Outlook
AT&T is no longer a growth stock, but it remains financially sound. In Q1 2025, the company reported nearly $31 billion in revenue, a 2.5% year-over-year increase. That’s a small improvement compared to the 0.1% decline in 2024.
Although costs rose faster than revenue, AT&T’s net income jumped by 26% to almost $4.4 billion. This increase was helped by a $1.4 billion gain from equity affiliates.
Looking ahead, AT&T expects revenue to rise slowly—at low single-digit rates. Analysts predict an 8% drop in profit this year, followed by a 7% rebound in 2026.
Despite modest expectations, AT&T stock has delivered strong returns—up more than 65% over the past year.
Still, some concerns remain. AT&T trades at a price-to-earnings (P/E) ratio of 17, well below the S&P 500 average of 28. On paper, that seems attractive. But given AT&T’s slow growth, investors may not see this as a bargain.
4. What to Expect in the Next Year
AT&T’s stock might not outperform the S&P 500 over the next 12 months. The company’s past two years have been impressive, and its long-term outlook is steady. It’s a solid choice for income-focused investors who value a reliable dividend.
However, growth investors may look elsewhere. AT&T is still a slow-growth business, and its relatively high P/E ratio could limit further upside.
For current shareholders, the news is reassuring. A significant decline seems unlikely. The stock looks like a stable hold. But for those looking to buy, especially for growth, AT&T may not be the best option right now.
Conclusion
AT&T has made progress by returning to its roots. It offers strong dividend stability and has regained investor trust. Still, with slow earnings growth and competition in a mature market, its stock may see only modest gains in the year ahead.
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