AT&T’s Dividend Payments Fell 46%. Now It’s Spending Billions on Stock Buybacks

AT&T (NYSE:T | T Price Prediction) pays its dividend holders far less cash than it did five years ago, and it now uses that money for buybacks. The metric that shows the shift is total cash dividend payments. They fell from $15.07 billion in 2021 to $8.18 billion in 2025, a 45.7% drop. Cash spent on share repurchases rose to $6.575 billion in 2025, up from just $215 million in 2024.

Why the Dividend Bill Reveals More Than Earnings

Earnings per share measure AT&T’s profitability. The dividend bill shows how management splits that profit between shareholders who want income and shareholders who want a growing stake. The quarterly payout has stayed at $0.2775 per share since the 2022 cut from $0.52. Because the per-share rate is frozen, every share AT&T buys back also brings down its future dividend bill.

Dividends and buybacks together came to about $14.755 billion in 2025, close to the 2021 dividend bill alone. The total payout barely moved. What changed is flexibility: management can raise or lower buybacks from year to year, while a dividend cut damages trust, as income investors learned in 2022.

How Fast AT&T’s Buybacks Are Growing

The buyback pace is picking up. AT&T returned $4.8 billion to shareholders in the third quarter of 2026, including $2.8 billion of repurchases. It had bought back over $7 billion of stock by the end of the quarter. Management is aiming for about $10 billion of buybacks in 2026 and $24B+ from 2026 through 2028, out of $45B+ in total shareholder returns.

Free cash flow covers the dividend with plenty to spare. Third-quarter free cash flow was $4.95B, compared with about $2 billion paid in dividends. Full-year guidance is $18B+, so a dividend bill the size of 2025’s would use only about 45% of 2026 free cash flow.

The core business supports the plan. Nearly 43% of AT&T’s advanced home internet customers also have AT&T wireless, and Advanced Connectivity service revenue rose 6.1% year over year. Chief Executive John Stankey called a fiber customer who also takes wireless “the most sustainable, longest lifetime value” combination in the industry.

Will the Frozen Dividend Grow Again?

For income investors, the short answer is not anytime soon. Management plans to keep the annual dividend at $1.11 per share through 2028, and extra cash will go to buybacks, fiber, and paying down debt. Net debt to adjusted EBITDA (a measure of leverage) rose to 3.13x after the $23 billion EchoStar (NASDAQ:SATS) spectrum purchase, and AT&T expects to return to its 2.5x range during 2029. Raising the dividend before then would run counter to that plan.

The stock offers some consolation. At $21.35, the yield is about 5.2%. Shares are down 9.87% year to date and 11.69% over the past month, as the stock has slid since earnings.

What Income Investors Should Track Next

The number to watch is AT&T’s full-year 2026 buyback total against the about $10 billion target. The bullish case: AT&T hits the target, and fourth-quarter free cash flow comes in near the guided approximately $6 billion, showing that the business itself pays for the buybacks. The bearish case: buybacks fall short because initial device costs and higher interest payments, both flagged on the third-quarter call, use up the cash.

Bottom Line

AT&T’s reducing dividend bill matters more than any quarterly earnings beat because it shows management chose flexible buybacks over dividend growth, and that choice will drive shareholder returns through 2028.

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