AT&T Dividend Declaration, Prelude to Hike Right Before Year-End

AT&T Inc. (NYSE: T) has just initiated its fourth payment of a $0.44 per common share quarterly dividend. We were not expecting a dividend hike this month, but we are formally setting December for the next dividend hike now.

Verizon Communications Inc. (NYSE: VZ) has raised its dividend in the last month with a declaration date of September 6. That was a 3% raise to $0.515 from $0.50 per common share per quarter.

If we our expectations pan out on the coming AT&T hike in December then realistically that payout will rise to $0.45 or $0.455 per common share per quarter. AT&T has lifted its dividend by 1 penny per quarter once a year for each of the past four years.

With a Thomson Reuters consensus earnings estimate of $2.57 EPS for 2013, AT&T’s payout ratio would be about 70% if the hike just goes up to $0.45 from $0.44. That is a high payout ratio, but it is not as if AT&T has to save all of its cash for endless acquisitions at this point even if it wants to (and needs to) buy more wireless spectrum.

JON C. OGG