AT&T: This Dividend Titan Grew Earnings 5.9%

AT&T Inc. is relatively cheap and offers a high but sustainable 3.9% yield as it continues to grow its subscriber base, assets and free cash flow.

AT&T offers a compelling income story supported by a strong yield and a sustainable payout ratio. AT&T consistently generates more than enough cash to fund dividends, with free cash flow rising to $16 billion this year. Its quarterly dividend has remained steady since 2022, backed by reliable earnings and growing fibre and mobile revenue streams.

Consistent subscriber growth, scalable infrastructure assets, and guided free cash flow of $16+ billion in 2025 indicates the dividend is well protected. The stock trades at just 14.1 times forward earnings, offering attractive value for a stable, income-generating business with long-term cash flow reliability.

AT&T INC. (New York symbol T) is the largest wireless (cellphone) carrier in the U.S., with 118.25 million subscribers (excluding mobile devices such as tablets). It also has 14.26 million high-speed Internet users and provides traditional telephone services to consumers and businesses.

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.

The company is now buying 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 will pay $5.75 billion when it completes the transaction within the next year. After the purchase, 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.

Continued build out of its networks lets AT&T keep adding subscribers

The company’s recent upgrades of its wireless and fibre-optic networks continue to help it attract new subscribers.

In the three months ended June 30, 2025, it added 401,000 new wireless users and 150,000 net new Internet subscribers (net of cancellations).

That helped lift revenue in the quarter by 3.5%, to $30.85 billion from $29.80 billion a year earlier; it also beat the consensus forecast of $30.46 billion.

Earnings before unusual items improved 5.9%, to $0.54 a share from $0.51. That topped the $0.53 consensus estimate.

AT&T continues to build out its ultrafast 5G wireless and fibre-optic Internet networks. It plans to spend $22 billion on network upgrades annually from 2025 to 2027. The company also expects to realize $6.5 billion to $8.0 billion in cash tax savings through 2027, due to the new U.S. budget bill.

As a result of the Warner Bros. Discovery spinoff, AT&T cut its annual dividend rate from $2.08 a share to $1.11. That new rate still gives you a high 3.9% yield.

Network upgrades should lift AT&T’s annual free cash flow (regular cash flow less capital expenditures), from just over $16 billion in 2025 to over $19 billion in 2027.

The company 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.

For all of 2025, AT&T still expects its earnings will range between $1.97 and $2.07 a share. The stock is up over 24% since the start of the year but still trades at a moderate 14.1 times the midpoint of that range.

The company’s TSI Dividend Sustainability Rating remains Above Average.

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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