AT&T Inc (NYSE:T) has pleased shareholders over the past 10 years, paying out an average dividend of 6.00% annually. The company currently pays out a dividend yield of 6.31% to shareholders, making it a relatively attractive dividend stock. Should it have a place in your portfolio? Let’s take a look at AT&T in more detail. View out our latest analysis for AT&T
How I analyze a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is it the top 25% annual dividend yield payer?
Does it consistently pay out dividends without missing a payment of significantly cutting payout?
Has dividend per share amount increased over the past?
Is its earnings sufficient to payout dividend at the current rate?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
NYSE:T Historical Dividend Yield June 27th 18
How does AT&T fare?
AT&T has a trailing twelve-month payout ratio of 39.82%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 59.37%, leading to a dividend yield of 6.48%. However, EPS is forecasted to fall to $3.02 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. T has increased its DPS from $1.6 to $2 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes T a true dividend rockstar.
In terms of its peers, AT&T produces a yield of 6.31%, which is high for Telecom stocks.
With these dividend metrics in mind, I definitely rank AT&T as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. There are three key factors you should further examine:
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
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