Chris Lange
5 min read
Quick Read
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AT&T (T) holds a bigger dividend cushion than Verizon (VZ) after its reset halved payout obligations, freeing more free cash flow post-capex.
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Verizon is delevering from 2.5x toward 2.25x net debt-to-EBITDA, while AT&T’s leverage will climb to 3.2x after its EchoStar acquisition closes.
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AT&T posted 432,000 postpaid phone net adds versus Verizon’s 184,000 and targets double-digit adjusted EPS growth through 2028.
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For retirement-focused investors who lean on telecom dividends, the choice comes down to Verizon (NYSE:VZ) versus AT&T (NYSE:T), and the real question is which payout is actually safer. Headline yield is the trap. Payout coverage after enormous network capital spending, balance sheet leverage, and the direction of the underlying business decide whether the check keeps coming. Judged that way, one of these dividends has a clearly bigger cushion behind it.
Dividend Safety and Payout Coverage
Verizon carries the richer headline of the two. Its trailing dividend is $2.795 per share for a yield of 5.59%, backed by a raise streak the company describes as 19 consecutive annual increases and an annualized forward payout of $2.83. AT&T yields 4.34% on a $1.11 annualized dividend that has been held flat since the WBD spinoff reset, with management committed to holding that level through 2028.
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Cash coverage is where the story flips. Verizon paid $11.481 billion in common dividends on $37.137 billion of operating cash flow against $17.011 billion of capex in its last fiscal year. AT&T paid only $8.18 billion in dividends on $40.284 billion of operating cash flow against $20.842 billion of capex. The reset cut AT&T’s payout obligation nearly in half from the $15.068 billion it distributed in fiscal 2021, and that cushion is precisely what a retiree wants sitting between the dividend and a bad quarter. Edge: AT&T.
