AT&T Preferred Stock Offers a Safer Alternative to the Dividend

Besides unsurprising fourth-quarter earnings, AT&T's (NYSE: T) management confirmed the giant telecommunications and entertainment conglomerate was still on track to deliver results in line with its three-year plan, which means the dividend should remain safe over the next several years.

Yet, besides a potential recession, the company's free cash flow and dividend depend on operational uncertainties, such as the decline rate of the legacy TV business and the success of the long-awaited video streaming service HBO Max. Thus, AT&T's preferred stock could represent an interesting alternative for investors looking for a safer income stream than the company's dividend.

After its recent 2% increase, the quarterly dividend of $0.52 per share represents an annual cash outflow of $15.09 billion, which is more than covered by the company's free cash flow that increased from $22.35 billion in 2018 to $29.03 billion in 2019.

Source Fool.com