For many AT&T investors (T 0.38%), the dividend yield is the primary reason they own the stock.
While they like the yield, the long-term shareholders would probably rather forget about AT&T stock's price performance. It trades down more than 40% from where it was a decade ago.
But there is a small amount of hope still as more recently AT&T stock has shown signs of life. Shares bounced off their 2023 lows on sure signs that management has committed itself to avoiding distractions and will focus on the telecom business. This helped the company post steady growth in monthly phone subscribers, and the stock is now up more than 30% from last year's bottom.
AT&T's dividend
AT&T currently offers a dividend yield of 6.2%, paying shareholders $0.2775 per share each quarter. In 2023, the company paid $8.1 billion in dividends, but that number will change this year.
The telecom giant has been steadily buying back stock, with its average diluted shares outstanding falling from 7.47 million to 7.19 million in the first quarter, and shares outstanding are likely to come down again this year as the company continues to buy back stock. At its current level of shares outstanding and dividend payments, the company would spend $7.98 billion on dividends this year.
Additionally, there's the possibility that AT&T will raise its dividend this year.
Will AT&T raise its dividend in 2024?
AT&T had a long history of raising its dividend annually, but that came to an end in 2022 when the company spun off the WarnerMedia business and slashed its dividend nearly in half.
Since then, the company has paid nine straight quarterly per-share dividends of $0.2775 and has shown no indications that it would raise its dividend.
However, the telecom titan has returned to free cash flow growth, which could help convince management to boost its payout. AT&T should eventually get back to dividend growth, and the stock price is likely to jump when it announces a dividend hike.
