Is AT&T's Nearly 6%-Yielding Dividend Finally Safe?
(NYSE: T) has one of the highest dividend yields in the S 500. At nearly 6%, it's a lot higher than the market index's average of 1.3%. Sustainability concerns are a big driver of that high yield. The telecom and broadband company slashed its payout by nearly half in early 2022 following the spinoff of its media business into Warner Bros. Discovery. It needed to retain additional cash to invest in its business and repay debt.
The company has struggled to cut its debt in recent years, which caused concerns that it might need to cut its payout again. However, its leverage ratio is starting to come down (with more progress expected). Meanwhile, its investments are beginning to pay dividends. Because of that, it's starting to look like AT&T's dividend might finally be safe from the risk of another reduction.
AT recently reported strong second-quarter results. While its overall revenue was down slightly (falling from $29.9 billion in the year-ago period to $28.9 billion), that was entirely due to a $0.3 billion decline in equipment revenues. The company's mobility services revenue rose 3.4% to $16.3 billion, while its consumer broadband revenues surged 7% to $2.7 billion.
Source Fool.com
