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It pays more dividends than any other company in the United States.
In total, it distributes more than $2.5 billion every quarter, or about $10.2 billion each year. That’s more than the annual gross domestic product of Nicaragua, Barbados, The Bahamas or Madagascar. In fact, it’s enough money to purchase Netflix (Nasdaq: NFLX), Royal Caribbean (NYSE: RCL), or LinkedIn (Nasdaq: LNKD) outright.
Right now the stock pays a 5.6% yield. But dividends are growing quickly. In the past decade, the dividend payment is up 72%.
That dedication to dividends has paid off. Today, AT&T (NYSE: T) pays more in dividends than any other company.
I don’t think I need to tell you too many details about AT&T’s business for you to know where those dividends come from. As one of the nation’s largest telecoms, the company earns a bundle in recurring revenue for providing wireless, digital cable and Internet services.
But can the company continue to pay its massive dividends… and continue to grow them?
AT&T certainly seems confident they can. In fact, in January the company announced a $9 billion buyback plan (equal to about 5% of shares outstanding). Reducing the share count will allow for more flexibility in meeting the dividend.
Meanwhile, the rise of smartphones has business booming. Last quarter, smartphone activations were up 60% year-over-year… helping lead to a 10% rise in wireless revenue.
But the truth is, AT&T’s yearly results were down in 2011 compared with 2010. In fact, the company saw net income of just $0.66 per share for the year — well below the $1.76 per share it pays in dividends.
The main reason for its low earnings is one-time events that occurred in the fourth quarter — pension charges and a break-up fee from its failed buyout of T-Mobile. Taking out those one-time expenses, the company earned $2.20 per share — more than enough to cover the dividend.
Risks to Consider: There’s no doubt AT&T is facing some headwinds. Large debt and a capital-intensive business take up money that could otherwise be used for dividends.
Action to Take –> But there is also little doubt the company is dedicated to paying — and increasing — dividends to its investors. After all, you don’t pay more than $10 billion a year in dividends if you aren’t serious about putting money in your investors’ pockets.
[Note: I own AT&T for my $200,000 real-money Daily Paycheck Portfolio. My goal is to earn a dividend check for every day of the year. In the past year, I've collected more than $16,000 in dividends. You can learn more about how to do the same thing by visiting this link.]
– Amy CalistriSource: StreetAuthority