AT&T: A 7% Yield About To Be Upgraded

With the current 50% limit, AT&T’s dividend would be considered dicey. Free cash flow is falling, and the payout ratio is too high.

Once that 50% boundary is lifted back to 75%, the dividend will look fairly secure, as the payout ratio is well below 75%.

Additionally, on its fourth-quarter conference call, management said it is committed to sustaining the dividend. That is not a guarantee and is not factored into SafetyNet Pro‘s ratings, but it is a positive factor nonetheless.

When the payout ratio limit changes shortly, AT&T will receive an upgrade to “B.” But at this exact moment, its low rating is a bit misleading.

Dividend Safety Rating: D

Dividend Grade Guide

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William K. 1 month ago Member's comment

Thanks for sharing a very useful insight!