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A Look at AT&T’s Expected Dividend Growth

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AT&T’s dividend projections

AT&T (T) has a strong history of returning cash to shareholders. AT&T reported DPS (dividend per share) of $2.01 in fiscal 2018 as compared to $1.97 in fiscal 2017. Analysts expect AT&T’s DPS to rise 2.0% YoY to $2.05 in fiscal 2019, 2.0% YoY to $2.09 in fiscal 2020, and 1.4% YoY to $2.12 in fiscal 2021.

Like AT&T, competitor Verizon (VZ) reported DPS of $2.39 in fiscal 2018 as compared to $2.34 in fiscal 2017. Analysts expect Verizon’s DPS to rise 2.1% YoY to $2.44 in fiscal 2019, 2.0% YoY to $2.49 in fiscal 2020, and 1.6% YoY to $2.53 in fiscal 2021. T-Mobile (TMUS) and Sprint (S) don’t pay dividends.

Dividend yield

Long-term investors tend to choose stocks that have better dividend yields and dividend growth. AT&T’s dividend yield, expressed as its DPS relative to its share price, is greater than Verizon’s. AT&T’s dividend yield was ~6.6% as of March 25, higher than Verizon’s ~4.0%.

For this reason, AT&T is likely a better pick than Verizon for income investors.

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