A high yield is not enough to make a stock attractive for dividend investors. A generous dividend must be sustainable in good times and in bad. The post-pandemic global economy, marked by high inflation, supply chain issues, and concern over a potential recession, is going to test every single company.

One good option for dividend investors looking for stability is to focus on industries that are concentrated and unlikely to be disrupted. Verizon Communications (VZ -0.49%) and AT&T (T -0.05%) operate two of the three major wireless networks in the United States, and the services they offer have become a necessity for most consumers.

It won't be entirely smooth sailing for either telecom giant, but both stocks offer high yields and relative safety for dividend investors aiming to avoid excessive risks.

Verizon Communications

Telecom giant Verizon finds itself under a bit of pressure. Revenue grew by just 2.4% in 2022 as the company struggled to add phone subscribers throughout much of the year. The first half of 2022 was marked by subscriber losses in the retail-wireless business. Verizon was able to rally, adding more than 800,000 net subscribers in the fourth quarter, although it lost a significant number of prepaid customers.

Verizon's guidance also left a lot to be desired. The company expects wireless-service revenue to grow by 2.5% to 4.5% in 2023, with adjusted earnings per share (EPS) expected to come in between $4.55 and $4.85. Verizon reported adjusted EPS of $5.18 in 2022 and $5.50 in 2021. Free cash flow is also moving in the wrong direction. That all-important metric was $14 billion in 2022, down from $19.3 billion in 2021.

Free cash flow is what fuels the dividend, and Verizon's deteriorating financial performance should certainly be on dividend investors' radars. The good news is that the free-cash-flow situation should improve going forward. Verizon expects capital expenditures to drop by more than $5 billion in 2024 from 2022 levels as the company completes its current round of investments.

While Verizon's customers are being pressured by inflation and a tough economy, the company is still generating enough free cash flow to cover the dividend. The latest quarterly-dividend payment of $0.6525 per share represents a forward yield of about 6.6%. In 2022, Verizon paid out $10.8 billion in dividends to investors. There's not a ton of breathing room right now, but the picture should improve this year and next as capital expenditures come down.

Verizon's dividend is going to grow slowly as the company works to improve the bottom line. But for investors looking for a high-yield stock, Verizon is a good choice.

AT&T

While Verizon has been struggling a bit with subscriber losses, rival AT&T has been racking up wins. The company was consistent throughout 2022, adding at least 650,000 net postpaid phone subscribers in each quarter.

After completing the spin-off of WarnerMedia, AT&T is back to being a pure telecom company. The legacy of AT&T's failed foray into the media business is still reflected on its balance sheet, but the company has been making good progress paying down its debt. This renewed focus on the core wireless business no doubt contributed to AT&T's solid results in 2022.

Beyond wireless, AT&T's fiber-internet business is a key growth driver. The company added at least 280,000 net fiber subscribers in each quarter of 2022. Non-fiber subscriber losses have been bigger, but the company generates more revenue per subscriber from fiber. The net result has been steadily growing broadband revenue.

AT&T sees its wireless-service revenue growing by at least 4% in 2023, along with broadband-revenue growth of at least 5%. Free cash flow should top $16 billion this year, an improvement of about $2 billion from 2022.

AT&T cut its dividend after spinning off WarnerMedia. The silver lining for anyone considering investing in AT&T today is that AT&T's dividend looks a bit safer than Verizon's for that reason. AT&T's latest quarterly-dividend payment of $0.2775 represents a forward yield of 5.6%, about a percentage point lower than Verizon's generous dividend.

However, AT&T will pay out just $8.4 billion in dividends over the next year based on the current dividend and share count. That's just over half of the company's 2022 free cash flow, giving the company plenty of excess cash to continue to knock down the debt on its balance sheet.

While Verizon offers a higher yield, dividend investors looking for a slightly safer bet should opt for AT&T instead.