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Here's How Many Shares of AT&T You Must Own to Make $5,000 in Annual Dividend Income
The Motley Fool· 2025-06-01 08:50
Core Viewpoint - AT&T is a significant player in the telecommunications sector, with over 100 million American consumers and nearly 2.5 million businesses relying on its products and services, making it a popular choice for income investors seeking reliable dividend income [1]. Dividend Calculation - The recent quarterly dividend payment for AT&T's common stock is $0.2775 per share, leading to an annualized dividend payment of $1.11 per share [4]. - To achieve an annual dividend income of $5,000, an investor would need to own approximately 4,504.5 shares of AT&T at the current dividend level [5]. - Investors can choose to buy 4,504 shares for slightly less than $5,000, purchase fractional shares to reach exactly 4,504.5, or round up to 4,505 shares for a little over $5,000, costing around $123,031 at the current share price [6]. Dividend Stability and Future Outlook - AT&T's dividend payout has historically been stable, with a 36-year streak of increases until a 46% cut following the spinoff of its entertainment unit in 2022 [8]. - Future dividend payouts may fluctuate, requiring more shares to maintain the same income level if dividends are cut again, or potentially allowing for an increase if the company decides to enhance its dividend to attract income investors [9][10]. - The current dividend payout ratio is approximately 68%, indicating sufficient financial flexibility to maintain dividends at current levels [11]. - In Q1 2025, AT&T paid around $2.03 billion in dividends while generating free cash flow of $3.1 billion, resulting in a payout ratio based on free cash flow of about 65.5%, suggesting the company can sustain its dividend payments without cuts [12]. Conclusion - Overall, AT&T's dividend appears relatively secure, allowing investors to potentially earn at least $5,000 in annual dividend income by investing in 4,505 shares [13].
