AT&T’s stock has risen 55% over the past 12 months, outperforming the S&P 500’s 12% gain by more than four times. Despite a slow start to 2025 for the broader market, AT&T’s strong performance stands out.
Strong Dividend Appeal
AT&T remains attractive to investors mainly for its dividend, which yields about 4%—one of the highest among S&P 500 companies. The company cut its dividend nearly in half in 2022 to $0.2775 per share quarterly ($1.10 annually) and has maintained that payout since.
While no dividend increase is expected soon, AT&T’s cash flow supports sustaining this dividend. In Q1 2025, free cash flow was $3.1 billion, and dividends paid totaled $2.1 billion.
Management forecasts at least $16 billion in free cash flow for the year, with $8.4 billion paid in dividends, indicating financial stability to maintain payouts, reduce debt, and invest in growth.
Focus on 5G and Fiber Expansion
AT&T shifted away from its failed media ventures after spinning off its media assets for $43 billion. Now, it concentrates on core telecom services, aggressively investing in 5G and fiber networks.
Capital expenditures reached $22.1 billion in 2024, with similar spending planned for 2025. This investment has helped grow its postpaid phone base and fiber subscriptions, which have added at least 200,000 net customers for 21 straight quarters.
Fiber, a high-margin business after infrastructure setup, is expected to drive future growth.
Telecom Industry Strength
AT&T benefits from operating in a telecom oligopoly alongside Verizon and T-Mobile. High infrastructure costs and regulatory barriers make it difficult for new competitors to enter the market.
This stable industry position supports AT&T’s long-term prospects as a reliable dividend stock, despite its stock not being considered flashy.
Investor Caution
While AT&T is a solid dividend stock, some analysts highlight emerging opportunities in U.S. tech infrastructure and AI sectors that may offer higher growth potential. Investors might consider these alongside AT&T for portfolio diversification.
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