If you're screening for high dividend-yielding stocks, it's likely Verizon (NYSE: VZ) and AT&T (NYSE: T) have come to your attention. Verizon is currently yielding an eye-popping 7%, and AT&T yields slightly less at 5.8%. When stocks reach this level of yield over a sustained period (sometimes because the stock price has fallen significantly), it's often a warning sign that the stock is in trouble and might not be able to keep up this level of payout. The stock sells off, further exaggerating its yield, and creating a vicious cycle that only ends when the dividend is finally cut (or worse, suspended).

So, is this the case with these two large telecoms? Let's find out if investors have a reason to worry about the dividend payout of these two.

The past 18 months have been tumultuous for AT&T. It sold DirecTV to a private equity firm in August 2021 and spun off Warner Media to merge with Discovery Communications and help create Warner Bros. Discovery in April. Both actions changed the fundamental makeup of AT&T's business, reverting the company back to its more telecom-focused state.

Continue reading

Source Fool.com