Key Takeaways
- AT&T cut its dividend 47% to $1.11 a year with the 2022 WarnerMedia spin-off and hasn’t raised it since, while Verizon raised its payout 2.5% in January for its 20th straight year.
- AT&T now covers its dividend better, with a comfortable cash dividend payout ratio of 45% TTM and 46% forward, against a still-comfortable 54% and 54% for Verizon.
- Verizon pays a 6.2% forward yield against AT&T’s 4.6%, and AT&T plans about $10 billion of buybacks in 2026 with its dividend held flat.
- What to watch: AT&T’s leverage, about 3.2x after its EchoStar spectrum deal, and whether the pickup in Verizon’s service revenue growth holds.
In 2022, AT&T (T) cut its quarterly dividend 47%, from $0.52 to $0.2775 a share, as it spun off WarnerMedia. To be fair, holders also got 0.241917 shares of Warner Bros. Discovery (WBD) for each AT&T share, and AT&T called it a dividend “resized to account for the distribution of WarnerMedia to AT&T shareholders.” It hasn’t raised the payout since.
Whereas Verizon (VZ) never stopped raising. In January, it lifted its quarterly dividend 2.5% to $0.7075, its 20th straight year of increases, and CEO Dan Schulman told investors: “That commitment is ironclad.”
Four years later, the company that cut its dividend is the one with more room to spare. So which would you rather own now?
| Metric | AT&T (T) | Verizon (VZ) |
|---|---|---|
| Forward dividend yield | 4.6% | 6.2% |
| Annual dividend | $1.11 | $2.83 |
| 5-yr dividend growth | -11.8% a year | 1.9% a year |
| Streak | Flat since the 2022 cut | 20 straight years of raises |
| Cash dividend payout ratio, TTM | 45% | 54% |
| Cash dividend payout ratio, forward (2026) | 46% | 54% |
| Net debt ÷ EBITDA, TTM | 2.91x | 3.35x |
Source: TIKR, prices at the Sept. 29, 2026 close; dividends and streaks from the companies’ declarations.
AT&T is spending its cushion on buybacks
Think of AT&T today as a fiber and 5G company. Its “Advanced Connectivity” segment (5G wireless, fiber and fixed wireless) makes up over 90% of service revenue, and sales there grew 5.1% in the second quarter. Copper is the opposite story, with revenue down 25.9% as AT&T shuts most of that network down by the end of 2029.
The fiber and 5G side funds the dividend with room to spare, with a comfortable cash dividend payout ratio of 45% TTM and 46% forward. The resizing is what changed the math.
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Dividends paid fell from $15.07 billion in 2021 to about $8.2 billion a year from 2023 on. Free cash flow has run at more than twice that every year since, which leaves a lot of room to breathe.
The rest goes to buybacks: about $10 billion this year. CFO Pascal Desroches said buybacks and the dividend together come to “essentially 100% of our outlook for free cash flow,” and AT&T plans to keep the dividend at $1.11.
The risk is the balance sheet, especially AT&T’s roughly $23 billion spectrum purchase from EchoStar (ECHO), which closed July 28, takes leverage to about 3.2x by AT&T’s own measure. The company targets 2.5x within about three years.
Verizon: a thinner cushion, and a bigger check
AT&T has plenty of room. Verizon’s cushion is thinner, but the business is gaining momentum. Service revenue growth accelerated to 2.8% in the second quarter, up from 1.6% in the first.
Adjusted EBITDA climbed 7.2%, pushing the margin to a record 40.1%, helped by what Schulman calls “our $9 billion cost program for this year.” Verizon has raised its guidance in each of the past two quarters and now expects free cash flow to grow 9% to 10% in 2026.
Better yet, its cash dividend payout ratio is a still-comfortable 54% TTM and 54% forward, with up to $4.5 billion of buybacks on top…
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Dividends paid have risen every year, from $9.26 billion to $11.48 billion. Free cash flow fell short of the dividend in 2016 and 2017 but has covered it every year since. I like the direction of both bars.
The risk is debt and a soft top line. Buying Frontier meant taking on about $12.9 billion of Frontier’s debt. Verizon says it repaid most of that in the first half, but TIKR still puts its net debt at 3.35x EBITDA. Revenue also slipped 0.7% last quarter as equipment sales fell nearly 20% on fewer upgrades.
So which dividend wins?
Ultimately, I’d rather own Verizon here. The 6.2% forward yield means $10,000 invested today generates about $620 a year in income, versus roughly $460 from AT&T. That’s a meaningful difference.
On the plus side, the dividend is still growing, which is covered at just 54% on both a TTM and forward basis, and the business is moving in the right direction. Verizon is guiding for 9% to 10% free cash flow growth this year. For an income investor, that’s the combination I’d want.
The counter here is that this doesn’t make AT&T’s dividend a bad one. In fact, its coverage is even better, at 45% TTM and 46% forward, while its fiber and 5G businesses are growing faster. CEO John Stankey also calls the stock “incredibly undervalued,” so the company’s buybacks give shareholders another way to benefit. Still, AT&T plans to keep the dividend at $1.11, so I’d rather own the company that’s still raising its payout.
There’s a catch with Verizon. Schulman’s turnaround is still relatively young, and the next dividend increase won’t come until the first declaration of 2027. That’s a wait worth keeping in mind.
So what is Verizon stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
