AT&T is Returning $40 Billion to Shareholders

A strategic focus on core telecom businesses, impressive network expansion plans and a commitment to shareholder returns position AT&T for strong future growth. The company’s ability to attract new subscribers through 5G wireless and fiber-optic Internet services has led to impressive revenue performance.

The company plans to return $40 billion to shareholders between 2025 and 2027, split evenly between dividends and share buybacks. This includes maintaining a high 4.1% dividend yield and authorizing a $10 billion stock repurchase program.

Meanwhile, the stock trades at a relatively modest 12.6 times the company’s forward earnings forecast.

AT&T INC. (New York symbol T; www.att.com) is your #1 Income Buy for 2025.

The company is the largest wireless (cellphone) carrier in the U.S., with 117.85 million subscribers (excluding mobile devices such as tablets). It also has 5.52 million traditional phone customers and 15.44 million high-speed Internet users.

AT&T continues to benefit from its plan to focus solely on its main telecom businesses. As part of that strategy, in April 2022, the company merged its WarnerMedia entertainment business with Discovery Inc. to form Warner Bros. Discovery (Nasdaq symbol WBD). At that time, AT&T shareholders owned 71% of the new firm. The company also received $40.4 billion in cash as part of the deal. To put that payment in context, AT&T’s current market cap is $196.0 billion.

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As a result of the spinoff, AT&T cut its annual dividend rate from $2.08 a share to $1.11. That new rate still gives you a high 4.1% yield.

Meanwhile, AT&T is doing a good job attracting new subscribers with plans that combine 5G wireless and fibre-optic Internet service. That helped lift its revenue in the fourth quarter of 2024 by 0.9%, to $32.30 billion from $32.02 billion a year earlier, which also beat the consensus forecast of $31.94 billion.

While earnings before unusual items were unchanged at $0.54 a share, that still topped the $0.50 consensus estimate.

AT&T: Shareholders to benefit from generous $40 billion return plan

AT&T continues to build out its ultrafast 5G wireless and fibre-optic Internet networks. It now plans to spend $22 billion on network upgrades annually from 2025 to 2027.

That expansion should lift AT&T’s annual free cash flow (regular cash flow less capital expenditures), from $16 billion in 2025 to over $18 billion in 2027.

Note—These figures exclude the proceeds from AT&T’s recent sale of its remaining 70% stake in satellite TV provider DirectTV to private equity firm TPG Inc., which had already purchased 30% of that business in 2021. AT&T will receive $4.5 billion (after-tax) in 2025 and an additional $500 million in 2029.

The company now plans to return a total of $40 billion to its shareholders between 2025 and 2027. That consists of $20 billion in dividends (based on the current annual rate of $1.11 a share) and $20 billion in share buybacks. In fact, the company has already authorized the repurchase of $10 billion of its stock by the end of 2026.

The stock also trades at just 12.6 times likely 2025 earnings of $2.16 a share.

Recommendation in Dividend Advisor: AT&T Inc. is a buy.

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Jim Bates

Jim is an associate editor at TSI Network. He is the lead reporter and analyst for The Successful Investor and Wall Street Stock Forecaster and a member of the Investment Planning Committee. Jim has held the Chartered Financial Analyst designation since 1992 and spent more than a decade at the Financial Post DataGroup before joining TSI Network. He has a Bachelor of Commerce degree from the University of Toronto.

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