Key Takeaways
- AT&T stock fell 8% on Oct. 23 after a report about SpaceX’s wireless plans, and UPS rose 6% on Oct. 27 after beating estimates and raising its outlook.
- UPS yields 6.1% and AT&T yields 5.2%, but UPS paid out 85% of its free cash flow as dividends over the trailing 12 months, against 44% at AT&T.
- AT&T plans to keep its dividend at $1.11 a share, while UPS’s dividend grew 10% a year from fiscal 2020 to fiscal 2025.
- The thing to watch is whether UPS’s free cash flow climbs back above its roughly $5.4 billion dividend, as analysts expect.
AT&T (T) shareholders have had a rough few weeks. The stock fell 8% on Oct. 23 after Bloomberg reported that SpaceX was in talks for access to at least 80,000 U.S. cell sites to build a rival wireless network.
Four days later, United Parcel Service (UPS) rose 6% after beating estimates and raising its full-year outlook. It also pays the bigger dividend: a 6.1% yield, against AT&T’s 5.2%.
So if I could only hold one of them for the next 10 years, which would it be?
| Metric | UPS | AT&T |
|---|---|---|
| Dividend yield | 6.1% | 5.2% |
| Dividend growth, fiscal 2020-2025 | 10.2% a year | -11.8% a year |
| Cash dividend payout ratio, TTM | 85% | 44% |
| Cash dividend payout ratio, forward | 88% | 46% |
| Net debt/EBITDA | 1.6x | 3.3x |
| Interest coverage | 6.7x | 3.9x |
Source: TIKR, Nov. 9, 2026. TTM is the 12 months to Sept. 30, 2026. Forward is on fiscal 2026 consensus.
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UPS is stretching to pay its dividend
UPS is deliberately cutting back on Amazon shipments, so its U.S. average daily volume fell 3.3% in the third quarter of 2026. Revenue still rose 6.7% to $22.9 billion because UPS has been going after better-paying work. For 2026, UPS now guides to about $6.1 billion of adjusted free cash flow.
UPS needs that cash. Its dividends paid jumped from $3.44 billion in fiscal 2021 to $5.11 billion in fiscal 2022. Over the same stretch, free cash flow slid from $10.8 billion in fiscal 2021 to $4.77 billion in fiscal 2025:
That means UPS paid out 113% of its free cash flow in fiscal 2025. Its cash dividend payout ratio is a tight 85% over the trailing 12 months to Sept. 30, 2026, and 88% on fiscal 2026 consensus.
CEO Carol Tomé told investors on the third-quarter call, “So clearly, our dividend is safe and secure.” UPS plans roughly $5.4 billion of dividends in 2026, and its free cash flow guidance covers that, if barely.
UPS also faces a reputational risk: on Oct. 7, Bloomberg reported that a UPS employee missed a security email, which let China get F-35 parts, and the State Department and Pentagon are investigating.
AT&T’s check is safe, and stuck at $1.11
AT&T is in the opposite position: it has room to spare. Its cash dividend payout ratio is a well-covered 44% over the trailing 12 months to Sept. 30, 2026, and 46% on fiscal 2026 consensus.
Part of that cushion comes from a smaller dividend. AT&T’s dividends paid fell from $15.1 billion in fiscal 2021 to $9.86 billion in fiscal 2022. Meanwhile, free cash flow has stayed between $18.5 billion and $20.5 billion since fiscal 2023:
AT&T plans to keep paying $1.11 a share a year and put its extra cash into buybacks, about $10 billion of them in 2026.
The business is growing, too. Third-quarter 2026 revenue rose 5.3% to $32.3 billion, and AT&T raised its 2026 adjusted EPS outlook to the $2.40 range. The main risk is debt: AT&T’s net debt is 3.3x EBITDA, and it doesn’t expect to reach its 2.5x target until 2029.
So which one would I hold?
I’d pick UPS to hold for the next 10 years. It pays the bigger check today, and its dividend is the one that can still grow.
UPS’s raise slowed to 0.6% in fiscal 2025, and AT&T’s dividend has stayed at $1.11. Even if both keep growing at those rates, $10,000 in UPS would pay about $6,271 over the next decade, against about $5,200 from AT&T.
The open question is whether UPS can afford it. Analysts expect its free cash flow to climb back above its roughly $5.4 billion dividend:
Nine analysts are behind the fiscal 2026 estimate of $6.15 billion, and last year’s final consensus landed right on the actual. CFO Brian Dykes said on the call that he expects free cash flow “to continue to move up and improve our dividend coverage.” With net debt at just 1.6x EBITDA, UPS also has room to get through a weak year.
That doesn’t make AT&T’s dividend unsafe. It’s covered more than twice over, and the business is growing. But a flat $1.11 is all AT&T has promised, and it carries more debt and faces a new rival in SpaceX. I’d rather own the bigger check that has room to grow.
Of course, UPS still has to deliver. If free cash flow stalls near fiscal 2025’s $4.77 billion, the board could hold the dividend flat for years.
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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!
