AT&T’s reliabiliity as an income generator is the primary argument for owning this stock. Despite heavy investment in 5G and fiber infrastructure, the company expects to generate over $18 billion in free cash flow in 2026. That means the dividend not only appears very safe, but is also well-positioned for future modest increases. For income-focused investors, this offers a rare combination of high yield and defensive stability in a volatile market environment.
And by selling its final stake in DirecTV and acquiring premium spectrum and fiber assets, the company has successfully refocused the business on its core competency: connectivity. The consistent growth in postpaid phone subscribers and the Mobility revenue rise demonstrate that this pure-play strategy is working. As data consumption skyrockets with AI and video applications, owning the critical “pipes” (both wireless and fibre) provides a wide competitive moat.
Meanwhile, the stock trades at just 11.5 times the company’s forward earnings forecast for the next fiscal year.
AT&T INC. (New York symbol T; www.att.com) is the largest wireless (cellphone) carrier in the U.S. It also has high-speed Internet users and provides traditional telephone services to consumers and businesses.
In February 2026, the company completed the acquisition of the Mass Markets fibre-optics business of Lumen Technologies Inc. (New York symbol LUMN), which provides high-speed Internet service to 1 million subscribers in 11 U.S. states.
AT&T paid $5.75 billion. Now that the purchase is completed, the company expects to sell a portion of this business to an undisclosed equity partner.
The purchase will let AT&T expand its fibre-optic services in major cities like Denver, Las Vegas, Minneapolis-St. Paul, Orlando, Phoenix, Portland, Salt Lake City and Seattle. It also advances the company’s plan to double its fibre-optic reach to 60 million locations by the end of 2030.
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.
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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 4.2% yield.
In the three months ended December 31, 2025, AT&T added 421,000 net postpaid phone subscribers and 283,000 net new Fiber subscribers, concluding a year with over 1 million fiber additions.
Revenue rose 3.6% to $33.47 billion from $32.3 billion a year earlier. That was due to higher Mobility, Consumer Wireline, and Mexico revenues, partially offset by a decline in Business Wireline. Excluding one-time items, earnings per share rose 20.9%, to $0.52 from $0.43
AT&T’s strong free cash flow supports an attractive dividend yield
AT&T continues to build out its ultrafast 5G wireless and fibre-optic Internet networks. It likely spent $22 billion to $22.5 billion on network upgrades in 2025.
The company also expects its free cash flow (regular cash flow less capital expenditures) to be over $18 billion in 2026. That easily covers this year’s aggregate common dividend payments of roughly $8.0 billion. AT&T also plans to buy back $20 billion of its shares through 2027.
For all of 2026, AT&T will probably earn $2.30 a share and the stock trades at just 11.5 times that estimate.
Recommendation in Dividend Advisor: AT&T Inc. is a buy.
