Core Viewpoint - AT&T offers a strong income potential with a 4.25% dividend yield, significantly above the sector average, and is expected to report stable earnings despite anticipated profit declines [1][4][19] Financial Performance - Over the past year, AT&T's stock has increased by 18.76%, with a year-to-date rise of 13.86%, indicating improved management execution and cash generation [2] - In Q2, AT&T reported revenue of $30.8 billion and diluted EPS of $0.62, up from $0.49 a year earlier, with operating income at $6.5 billion and net income at $4.9 billion [6] - The company generated $9.8 billion in cash flow from operations and $4.4 billion in free cash flow, an increase from $4.0 billion the previous year [7] Business Segments - Mobility revenue grew by 3.5% to $16.9 billion, while fiber broadband revenue surged nearly 19% year-over-year to $2.1 billion, driven by the addition of 446,000 new connections [8] - The sale of AT&T's remaining 70% stake in DIRECTV has streamlined operations and allowed for more investment in 5G and fiber initiatives [8] Market Context - Telecom stocks have shown strong momentum, with traditional telecom companies averaging a 14.3% gain since the last reporting cycle, supported by optimism in the sector [5] - Global telecom spending is projected to increase by about 4% this year to approximately $1.42 trillion, indicating steady demand for connectivity [5] Analyst Sentiment - Analysts expect a 10% year-over-year drop in profit but remain optimistic about AT&T's ability to offset weaknesses in older business lines with growth in wireless and fiber [4] - The consensus among analysts is a "Moderate Buy" rating, with a mean price target of $30.65, suggesting an estimated 18% upside from the current stock price [17] Future Outlook - AT&T anticipates service revenue growth in 2025, with mobility revenue expected to rise by about 3% or more and consumer fiber broadband climbing in the mid-to-high teens [14] - The company plans to spend between $22 billion and $22.5 billion this year while generating around $16 billion in free cash flow [14]

Core Insights - Several companies are set to pay dividends in August, providing opportunities for income-seeking investors to earn steady returns while some also exhibit strong growth fundamentals that could enhance stock prices in the future [1] Group 1: AT&T (NYSE: T) - AT&T will pay a dividend of $0.28 per share, yielding 3.84%, to investors who owned the stock before the July 10 ex-dividend date [2] - The company has refocused on its core wireless and broadband businesses after years of costly acquisitions, presenting a stronger case as a long-term buy due to improved financials and a reliable dividend [2][3] - AT&T has shed non-core assets like DirecTV and Time Warner, concentrating on wireless and fiber connectivity, which has boosted profit margins and cash flow, allowing the company to pay down $45 billion in debt over the past four years [3] - The company generated over $40 billion in operating cash flow over the past year, sustaining its quarterly dividend of $0.2775 per share [4] Group 2: Verizon (NYSE: VZ) - Verizon is paying a dividend of $0.68 per share on August 1, representing a 6.26% yield for shareholders of record before July 10 [7] - The company continues to innovate in key growth areas, expanding its 5G portfolio with flexible wireless and broadband bundles to meet the growing demand for premium plans and streaming services [9] - Verizon has secured significant contracts, including a multibillion-dollar private 5G network in the UK and a dedicated 5G network slice for first responders, highlighting its competitive edge and potential for new revenue streams [10] - Despite challenges like high capital spending and competitive pressure, Verizon's scale and customer-focused strategy should reassure investors of its long-term stability [11]