AT&T is planning to return a staggering $45 billion to shareholders over the next three years through dividends and share buybacks. The announcement signals confidence in the telecom giant’s turnaround strategy—but is the stock a buy heading into 2026?
Key Takeaways
- AT&T (T) announced a $45 billion shareholder return program through 2028, including $20 billion in share buybacks and maintained dividend payments.
- The company’s dividend yield of approximately 6.5% is among the highest in the S&P 500, providing significant income for investors.
- Debt reduction remains a priority—AT&T has paid down over $30 billion since divesting WarnerMedia and is targeting investment-grade credit metrics.
- 5G and fiber network investments are driving subscriber growth, with AT&T Fiber adding over 300,000 customers quarterly.
Can AT&T Afford This Massive Shareholder Return?
After the WarnerMedia spinoff and debt reduction, AT&T’s balance sheet is significantly healthier. Free cash flow of $16-17 billion annually comfortably covers both dividends (~$8 billion) and buybacks. The company’s reduced debt load means more cash flows to shareholders rather than bondholders.
Management’s $45 billion commitment over three years implies approximately $15 billion annually in total shareholder returns—aggressive but achievable given current cash flow projections. The key risk is whether subscriber growth and ARPU (average revenue per user) trends continue favorably.
How Does AT&T Compare to Verizon?
Verizon (VZ) offers a similar dividend yield (~6.5%) but has pursued different strategic priorities. Verizon has been more conservative on buybacks while investing heavily in 5G spectrum. AT&T’s more aggressive shareholder return posture may appeal to income-focused investors, while Verizon’s network investments may drive longer-term growth.
Both companies face secular wireless competition from T-Mobile (TMUS), which has gained market share consistently. However, the U.S. wireless market is effectively an oligopoly where all three carriers generate healthy profits.
Is AT&T Stock a Buy for 2026?
AT&T trades at approximately 8x forward earnings—cheap by historical standards and compared to the S&P 500 (~20x). The 6.5% dividend yield provides immediate income while waiting for capital appreciation. For income investors, the combination is attractive, though growth investors may prefer higher-growth alternatives.
Stocks Mentioned
- AT&T (T) – Market cap ~$150B, 6.5% dividend yield, trading at ~8x earnings. Planning $45B shareholder returns through 2028.
- Verizon (VZ) – Market cap ~$160B, similar dividend yield, more conservative capital return strategy.
- T-Mobile (TMUS) – Market cap ~$250B, lower yield but higher growth through subscriber gains and network integration.
What This Means
- For income investors: AT&T’s 6.5% yield plus buyback support makes it attractive for dividend portfolios. The payout appears sustainable based on free cash flow coverage.
- For value investors: At 8x earnings with improving fundamentals, AT&T offers traditional value characteristics. Turnaround execution is key to unlocking upside.
- For growth investors: Telecom sector growth is limited. If you prioritize capital appreciation, look elsewhere—AT&T is an income story.
- For retirees: High-yield telecoms can anchor income portfolios, but diversify across multiple dividend stocks to reduce concentration risk.
Source: The Motley Fool
Disclosure: Trending Society does not provide investment advice. This article is for informational purposes only. Consult a financial advisor before making investment decisions.
