AT&T Offers Shareholders 34 Consecutive Annual Dividend Hikes (T)
By: Ned Piplovic,
AT&T, Inc. (NYSE:T) has delivered to its shareholders 34 consecutive annual dividend hikes and the company’s current payout ratio indicates that this dividend boosting-streak should continue, at least in the near term.
AT&T began its current streak of 34 consecutive annual dividend hikes in May 1984 when AT&T started paying dividends as the Southwestern Bell Corporation – one of the Regional Bell Operating Companies created 1982 by the regulatory break of the AT&T monopoly. While the company’s share price experienced some headwinds over the past couple of years, the dividend hikes should continue.
AT&T’s current dividend payout ratio of 38% indicates that the dividend distributions are well covered by the company’s earnings. The current payout ratio is significantly better than the 81% five-year average ratio over the past five years, which is 60% higher than the 50% generally-accepted upper limit for a sustainable ratio.
The 34 years of consecutive annual dividend hikes makes AT&T one of the Dividend Aristocrats. The Dividend Aristocrats consist of S&P 500 companies that have boosted their annual dividends for at least 25 consecutive years and whose individual market capitalization exceeds $3 billion. Currently, only 53 companies have met the criteria for the Aristocrat designation.
In addition to the long streak of annual dividend hikes, AT&T also offers a dividend yield that it is approaching 7%. Unfortunately, AT&T’s share-price decline assisted in the yield growth. However, if the share price stabilizes and enters a recovery trend, the current decline will turn out to be an opportunity to take a position at a significant price discount and collect meaningful dividend income while waiting for the price recovery.
Interested investors should conduct their own research to confirm that the AT&T stock is compatible with their investment strategy. Any investors that claim share ownership before the April 9, 2019 ex-dividend date will be eligible for the next round of dividend distributions. AT&T will distribute the next quarterly dividend on its pay date of May 1, 2019.
AT&T, Inc. (NYSE:T)
Based in Dallas, Texas, AT&T Inc was founded in 1983 as the Southwestern Bell Corporation, which was one of the Regional Bell Operating Companies created by the regulatory breakup of the AT&T monopoly. The company operated as SBC Communications, Inc. for a decade before assuming its current name in November 2005. The current AT&T company provides communications and digital entertainment services through four business segments – Business Solutions, Consumer Mobility, Entertainment Group and International. The Business Solutions segment offers wireless services, strategic services, legacy voice, data services, wireless equipment and other telecommunications services. The Consumer Mobility segment offers wireless voice, data communications, consulting, advertising application and co-location services, as well as various hardware and accessories for wireless communication. The company’s Entertainment Group segment provides video entertainment and audio programming channels to approximately 25 million subscribers, broadband and internet services to 13.5 million residential subscribers. The International segment offers local and international digital television services, digital video entertainment and audio programming under the DirecTV and SKY brands throughout Latin America, as well as wireless services in Mexico to approximately 15 million subscribers under the AT&T and Unefon brands.
The company’s current $0.51 quarterly dividend distribution represents a 2% boost over its $0.50 quarterly payout from the same period the previous year. This payout corresponds to a $2.08 annualized amount and currently yields 6.84%, which is 24.4% above AT&T’s five-year yield average of 5.5%.
However, while AT&T has been providing steady annual dividend hikes, the 18% share price drop over the past year drove the recent yield increase to above average levels. Using the share price from 12 months ago for the yield calculation results in a 5.6% yield, which is closer to the five-year average.
Regardless of the reason for the boost, AT&T’s current 6.84% yield is 480% higher than the 1.18% simple average yield of the entire Technology sector, as well as 160% higher than the 2.62% average yield of the Domestic Telecom Services industry segment. Even the 5.6% yield calculated using last year’s share price still would have been 375% higher than the current Technology sector average and 114% above the Domestic Telecom Services segment’s simple average yield.
Just over the past two decades, AT&T more-than doubled its total annual dividend payout amount. That level of dividend advancement corresponds to an average dividend growth of 3.8% per year.
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