Historically Cheap Telecom Stocks Now Yielding 4.5% to 6.1% for Patient Dividend Hunters
After a sharp selloff hammered telecom stocks, Verizon, AT&T, and BCE now sit at yields that make income investors pay attention, but only one of them has the free cash flow cushion that makes that yield worth trusting.
Telecom carriers work a lot like utilities. Customers pay every month, and mature, capital-intensive networks turn those bills into large, regular dividends. Verizon (NYSE:VZ | VZ Price Prediction), AT&T (NYSE:T) and BCE (NYSE:BCE) all run on that model, and all three got cheaper after a sharp Friday plunge in telecom stocks. Verizon, the largest of the group, now yields 6.12%. A big yield only counts if free cash flow covers it, and coverage looks quite different from one carrier to the next.
Verizon: Ultra-High Yield Backed by Two Decades of Raises
Verizon yields 6.12% at $43.18, which puts it in ultra-high-yield territory. The quarterly payout is $0.7075 per share, or $2.83 annualized.
Dividend safety: With 4,154,775,000 shares outstanding, the dividend costs about $11.76 billion a year. Management guides full-year free cash flow to $21.94 billion to $22.14 billion, so the payout takes up roughly 53.59% of that floor. Measured against trailing EPS of $3.84, the payout ratio is 72.79%. Against the bottom of the raised adjusted EPS guidance ($4.99 to $5.04), it drops to 56.71%. Second-quarter free cash flow rose 27.1% to $6.43 billion. Net unsecured debt stands at 2.5x adjusted EBITDA, and management targets 2.0 to 2.25 times during the 2027 timeframe. Verizon’s latest increase was its 20th consecutive year of dividend increases, and the payment record shows the quarterly rate climbing step by step from $0.615 to $0.7075. CEO Dan Schulman described an “ironclad commitment to our dividend” on the call.
Bull case: Verizon keeps paying you while it restores growth. After the Frontier deal, fiber connections reached 10.9 million, up 43.3%. The company added 184,000 postpaid phones in the quarter, and adjusted EBITDA margin expanded to 40.1% from 37.1%. Cash left over after the dividend is going to buybacks of up to $4.5 billion, and the stock trades at a forward P/E of 9.
Risk: Revenue has stalled. Quarterly revenue slipped 0.7%, wireless equipment revenue fell 20%, and fixed wireless broadband net adds dropped 30.6%. The shares are down 13.23% over the past month, a sign that investors are pricing in tougher competition.
AT&T: Lower Yield, Widest Free Cash Flow Cushion
AT&T yields 4.51% at $22.42, which makes it a high-yield name, though short of ultra-high-yield. It pays $0.2775 per quarter, or $1.11 annualized.
Dividend safety: Coverage is the strongest of the three. The payout costs about $7.61 billion a year, against full-year free cash flow guidance of $18 billion or more. That is roughly 42.26% of forecast cash flow. The payout ratio is 36.63% of trailing EPS and 49.33% of the lower bound of adjusted EPS guidance ($2.25 to $2.35). Second-quarter free cash flow slipped 4.0% to $4.67 billion, but the company holds $17.57 billion in cash. Leverage runs a bit hot, with net debt at 2.68x adjusted EBITDA versus a 2.5x target. The track record has a gap. AT&T cut its quarterly payment from $0.52 to $0.2775 in 2022 after the Warner spin-off, and the rate has stayed flat since then. This is a rebuilt dividend with no growth streak behind it.
Bull case: AT&T’s cash flow plan keeps going up: $19 billion or more in 2027 and $21 billion or more in 2028, supporting $45 billion or more in shareholder returns through 2028. The quarter brought 432,000 postpaid phone net adds and 646,000 internet net adds. Fiber now reaches 38.6 million locations, on the way to 60 million by 2030. The forward P/E is 10, and the stock is up 55.52% over five years. Today’s lower payout leaves room for an increase once debt reaches target.
Risk: Satellite competition is the newest worry. One analyst warned that the SpaceX threat could loom over AT&T’s stock for a prolonged stretch, and the shares have dropped 12.88% in a month.
BCE: Canadian Cash Flow, U.S. Dollar Payouts and a Reset Dividend
BCE is the odd one out. It is a Canadian carrier that trades on the NYSE, and it has pushed into U.S. wireline through its Ziply Fiber acquisition. The dividend is declared in Canadian dollars at C$1.75 annualized. Some screens show a yield of 9.32%, but that figure sets the Canadian-dollar rate against the U.S.-dollar share price. NYSE holders actually received $0.315, $0.313, $0.319 and $0.315 over the last four payments. At $18.86, that works out to a trailing yield of about 6.69%, still ultra-high-yield.
Dividend safety: The reset is the starting point. BCE’s per-share payment fell from $0.718 to $0.319, which ended its long growth record. The smaller payout now costs about C$1.63 billion a year, roughly 51% of the $3.2 billion in free cash flow BCE generated last year. Second-quarter free cash flow came in at over $1 billion, and 2026 guidance calls for free cash flow growth of 4% to 10%. Leverage of about 3.7 times is the highest in the group. BCE has $4.6 billion in liquidity, and its pension plans show a $4.9 billion solvency surplus. CEO Mirko Bibic told analysts: “We’re focused, hyper-focused on the 3.5 times leverage ratio by the end of 2027, and we’re going to hit that.”
Bull case: A dividend that has already been cut to fit cash flow is easier to maintain. BCE has raised $6.6 billion of its planned $7 billion in asset sales. The company is also targeting $1.5 billion in cost savings by 2028 and has 335 megawatts of AI data center capacity already under contract. U.S. fiber and AI infrastructure give it growth that the two domestic carriers can’t offer in the same form. The forward P/E is 11.
Risk: Currency drives your income here. Because the payout is denominated in Canadian dollars, each U.S.-dollar check moves with the exchange rate, as the swings between $0.311 and $0.319 per payment show. A weaker loonie means less income for U.S. holders even when BCE leaves its dividend unchanged.
What Telecom Income Really Depends On
All three carriers pay from the same engine: monthly subscriber cash that has to cover network spending, debt service as well as the dividend. Verizon matches ultra-high yield with a 20-year raise streak and room to spare. AT&T offers the widest free cash flow cushion at a lower yield. BCE now pays a smaller, better-covered dividend in a currency U.S. holders don’t control. In every case, the yield holds up only as long as free cash flow keeps going up and leverage keeps falling.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
