Is AT&T’s Dividend Sustainable?
As yields on government debt reach historically low levels, income investors are finding it difficult to grab attractive yields above five percent. Currently, there is one mega-cap (market cap above $200 billion) company with a dividend yield above five percent, which is AT&T (NYSE: T). At the time of writing this article, the 10-year U.S. Treasury yield is hovering around 1.58%, a variance of 4.19% from AT&T's 5.77% trailing dividend yield.
Image source: Getty Images
The large yield is leaving investors scratching their heads wondering if AT&T's current dividend is sustainable and whether the company will be able to keep raising its dividend by the historic 2.1% annual growth rate. To determine the strength of AT&T and the sustainability of its dividend, investors need to analyze three fundamentals within the company: consistency and growth of free cash flow, earnings growth, and the amount of debt which AT&T holds.
Source Fool.com