AT&T Skips Annual Dividend Raise for the First Time Since 2005


By Eric Volkman, MotleyFool

Habitual dividend raiser AT&T (NYSE:T) seems to have shaken its habit, at least for now. On Friday, the telecom giant declared a fresh quarterly dividend; the amount of $0.52 per share matched that of its four predecessors. This means that the company is not raising the payout, as it has done for the first dividend of every year consistently beginning in 2006.

When heralding its last start-of-year raise declaration in a December 2019 press release, the company wrote that it was "consistent with AT&T's capital allocation strategy announced in [the preceding] October calling for continued modest annual increases in the dividend."

Two people conversing at an outdoor table, one of whom is holding a smartphone.


That ambition has been scaled back. In Friday's announcement, AT&T wrote that it "expects to have the financial flexibility in 2021 to continue to invest in growth areas, sustain the dividend at current levels, and focus on debt reduction." It added that it would provide financial and capital allocation guidance with its fourth quarter of fiscal 2020 results, which are scheduled to be released on Jan. 27.

An email request from The Motley Fool seeking clarification was not answered.

Many consider AT&T to be a prime dividend stock, as its yield is high and the telecom incumbent has strong cash flow from an army of paying customers. However, while shareholders welcomed those annual raises, the boosts weren't particularly generous. For example, the payout rose by less than 2% with a $0.01 per share bump in that 2019 hike.

That likely won't dissuade dividend stock aficionados from buying or maintaining positions in the company, though. It is still a high-yield stock at its present 6.7% level.

AT&T's upcoming payout will be disbursed next Feb. 1 to investors of record as of Jan. 11.

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