AT (NYSE: T) has long been known for its generous dividend, which investors have often been attracted to. For many, dividends seem like a guaranteed return stream and can also serve as a cash-flow instrument to fund retirement.
However, dividends are not guaranteed, and when the yield rises above 5%, alarm bells should ring in investors' heads. With AT's dividend yield currently sitting AT 7.3%, can investors trust it? Or should they find another stock? Let's find out.
While many companies choose to pay dividends, some tend to have higher-than-average payouts. These entities are usually utilities, real estate investment trusts (REITs), and telecom companies like AT Because these companies usually have very steady cash flows due to required monthly payments, they can afford to pay a high dividend because they have strong visibility into future costs.
Source Fool.com