uploads///Telecom Q Dividend Yield

How AT&T’s Rising Leverage Could Impact Investors

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Oct. 26 2018, Updated 1:02 p.m. ET

AT&T’s debt levels

At the end of the third quarter, AT&T’s (T) long-term debt was $168.5 billion. Its short-term debt was $14.9 billion, and its total debt was $183.4 billion. AT&T’s total debt was $190.2 billion at the end of the second quarter. AT&T’s debt increased after its mid-June acquisition of Time Warner for $85.4 billion.

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AT&T’s dividend yield

In the third quarter, AT&T (T) returned $3.6 billion to shareholders in the form of dividends. In the third quarter, AT&T declared a quarterly dividend of $0.50 per share, up ~2.0% YoY (year-over-year). On October 24, its quarterly dividend was equivalent to an annualized dividend of $2.00 per share and a dividend yield of ~6.6%. In comparison, Verizon (VZ) has a dividend yield of ~4.2%. Sprint (S) and T-Mobile (TMUS) don’t pay equity dividends.

AT&T reported a free cash flow balance of $6.5 billion in the third quarter, an increase of ~16.6% YoY from $5.6 billion in the third quarter of 2017. AT&T’s free cash flow balance supported its generous dividend payout. 

The company’s cash flow from operations rose ~14.3% YoY to reach $12.3 billion in the third quarter. Its total capital expenditure (or capex) was $5.9 billion in the third quarter, which was higher than its capex of $5.3 billion in the third quarter of 2017.

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