AT&T Stock: Here’s Why AT&T Is One Dividend Stock to Hold Forever

AT&T StockLove AT&T Stock’s Dividend

AT&T Inc. (NYSE:T) is your classic dividend stock. That’s why you often only see AT&T stock in widow and orphan portfolios. But that’s a good thing when it comes to investing.

AT&T is the second-largest cell phone provider and the largest pay-TV provider in the U.S. If you look at your phone or cable bill every year, you’ll notice that the price keeps increasing. You might complain, but at the end of the day, it’s just too much of a hassle to switch carriers. And that’s great for AT&T stock and its shareholders.

The telecom giant’s subscription-based revenue streams and ability to raise the price of them every year provides the company with stable revenue and cash flow that makes the company a dependable source of income for dividend investors.

AT&T has been raising its dividend every year since it started issuing dividends in 1984. That qualifies the company as a “dividend aristocrat,” which means it is an S&P 500 company that has increased its dividend for at least 25 consecutive years. That puts AT&T in an elite group of well-known blue-chip companies.


And AT&T does not plan to buck that trend anytime soon. The company just announced that it’s increasing its dividend from $0.47 per quarter to $0.48 per quarter. (Source: “AT&T Increases Quarterly Dividend by 2.1 Percent,” AT&T Inc., December 18, 2015.) That may sound low, as it’s only a 2.1% increase, but when you consider that AT&T stock’s current dividend yield is a juicy 5.17%, shareholders can be a bit forgiving.

And now with the recent $49.0-billion acquisition of DirectTV, that streak should be able to continue into the foreseeable future. The deal substantially increases AT&T’s customer base in the U.S. and opens the company up to DirecTV’s business in Latin America, which should provide another stream of revenue growth.

These new revenue streams should boost AT&T cash flow, which should help the company to continue rewarding investors through steadily increasing dividends.

Also, AT&T’s subscriber base continues to grow. In the third quarter of 2015, it added 2.5 million domestic wireless customers, 192,000 IP broadband customers, and 26,000 domestic DirecTV customers. (Source: “AT&T leans on prepaid connected devices for subscriber growth in Q3,” FierceWireless, October 22, 2015.) Churn rate was low at only 1.33%, which shows that customers really do find it a hassle to switch carriers.

That’s good news for investors, as it’s likely that AT&T stock will keep dishing out those dividends for decades to come.