The 10-Year Treasury Just Hit 5%. AT&T Pays About the Same. Here’s What a Retired Couple With 10,000 Shares Should Do With the Check

AT&T’s dividend check landed on Nov. 2: $0.2775 a share, the same amount it has paid every quarter since the spring of 2022. On Tuesday the 10-year Treasury yield closed at about 5% after a hotter-than-expected October inflation report, within a hair of AT&T’s 5.1% dividend yield. If the check is part of what you live on, the question is how safe it is now.

Take a couple, 61 and 59, a scenario built for this story. They retired three years ago from software jobs, moved to Washington State, and hold 10,000 AT&T shares in a taxable brokerage account, bought on Jan. 4, 2016, at $34.35, for $343,500. The shares are worth $219,400 today. The checks are why they kept them: $2,775 every quarter, $11,100 a year, beside $1.6 million in IRAs and 401(k)s and about $200,000 in a money market fund.

The company’s own words, from its Oct. 21 third-quarter report, are that it “plans to maintain its current annualized common stock dividend of $1.11 per share” while buying back about $10 billion of stock this year. That buyback reads as the cushion under the check, and the clearest sign the dividend is safe: AT&T is spending more on its own shares in 2026 than it pays in dividends, and buybacks can be slowed before a dividend is touched. The limit of that reading is the $150 billion of net debt, which gets paid before either.

The check, and what the 2022 cut took

Their first check, in January 2016, was $0.48 a share, or $4,800, and AT&T raised it a penny a year to $0.52. Then, on Feb. 1, 2022, with the WarnerMedia spin-off, the board set the annual dividend at $1.11 a share, down from $2.08. For the couple that meant $20,800 a year became $11,100, a cut of $9,700 a year. Over the 19 reduced checks since, the cut has cost them $46,075.

Each AT&T share came with 0.241917 shares of Warner Bros. Discovery, 2,419 shares in their case, and they sold them the week they arrived, at $24.78, for $59,943. Add that to the 44 checks since 2016, $178,725 in dividends, and $238,668 of cash has come back on a $343,500 purchase, with $219,400 of stock still in the account: a 33% total return over nearly eleven years. The S&P 500 did far better, and they know it. The check is the point.

The cash behind the check

Over the four quarters to Sept. 30, AT&T’s cash flow statements show it generated $40.27 billion from operations and spent $22.42 billion on capital expenditures, leaving $17.85 billion. Dividends took $7.93 billion of that, 44%, so the check is covered 2.25 times. On AT&T’s own measure, which also subtracts vendor financing, it reported $5.0 billion for the third quarter and guides to $18 billion or more for 2026, $19 billion or more in 2027 and $21 billion or more in 2028. The dividend is 44% of the 2026 floor.

The other half of the cash is going to the buyback. AT&T repurchased $2.8 billion of stock in the third quarter and targets about $10 billion for the year, part of $24 billion or more of buybacks through 2028. Dividends of $7.93 billion plus $10 billion of buybacks come to $17.93 billion, nearly all of the $18 billion floor. That is why the buyback is the cushion: in a bad year, the $10 billion is what gets trimmed first.

Rates at 5% and $150 billion of debt

Tuesday’s inflation report, prices up 0.4% in October and core prices up 0.3% for a third straight month, sent the 10-year Treasury yield to about 5% at the close and above it during the day. Two things follow for an AT&T holder.

First, the comparison. $100,000 of AT&T at today’s price pays $5,059 a year. $100,000 in 10-year Treasuries at 5% pays $5,000, guaranteed. The stock’s yield premium over a government bond has shrunk to 0.07 of a point. That does not make the dividend less safe. It makes the stock less necessary for income, and the price has been saying so all year: AT&T is down 11.7% in 2026.

Second, the debt. Net debt stood at $149.8 billion on Sept. 30, 3.13 times adjusted EBITDA after the $23 billion EchoStar spectrum purchase, up from 2.68 times in June. AT&T paid $6.80 billion of interest in 2025, close to its yearly dividend bill, and management says leverage returns to its 2.5 times target during 2029 through earnings growth, debt repayment and 2027 asset sales. Higher rates for longer make every refinancing cost more. For the check, the order of claims is the thing to hold onto: lenders first, then the dividend, then the buyback.

The one decision: where the shares sit

The couple’s decision this year is a tax one. In 2026 a married couple filing jointly pays 0% federal tax on qualified dividends and long-term gains until taxable income passes $98,900, and the standard deduction is $32,200. Their income without any Roth conversion is $8,000 of interest, $20,000 of index-fund dividends and $11,100 from AT&T: $39,100 in all, taxable income $6,900, federal tax $0. Washington has no income tax, and his former employer’s retiree health plan covers them until Medicare, so no exchange premium credit is in play.

That leaves room. They can convert $92,000 from a traditional IRA to a Roth this year and keep every dividend dollar in the 0% band: ordinary taxable income becomes $67,800, taxed at $7,640, and the $31,100 of dividends stacks on top to land exactly at $98,900. Tax of $7,640 on a $92,000 conversion is 8.3%. The next $1,000 of conversion costs $270, because it pushes $1,000 of dividends out of the 0% band: 12% on the conversion dollar plus 15% on the dividend dollar it displaces.

If the 10,000 AT&T shares sat in the traditional IRA instead and the couple drew the $11,100 to spend, it would come out as ordinary income at 12%: $1,332 a year, $13,320 over ten years. In the taxable account the same check is tax-free as long as the band holds. That is why a stock held for its dividend belongs outside the IRA for a couple in their position, and why the conversion is worth doing now: once Social Security starts, up to 85% of it joins the ordinary pile and the room shrinks.

Where the plan is weak

The weak spot is the share price. AT&T closed down 6.5% on its earnings day, Oct. 21, as investors looked past a revenue beat to the debt, and fiber revenue per customer fell 4% on introductory pricing. None of that touches the next check, due to be declared in mid-December if last year’s schedule holds. All of it touches what the shares would fetch if the couple ever needed the $219,400.

At 7.3% of a $3 million portfolio, the position is a holding, not a bet. If the dividend ever fell again, their spending would not change: the money market fund holds two years of their $100,000 a year. That is the test for any stock you hold for a check.

The bottom line

AT&T pays $1.11 a share, says it will keep paying it, and covers it more than twice on cash from operations after capital spending, with a $10 billion buyback standing between a bad year and the dividend. For a retired couple holding 10,000 shares, that is $11,100 a year, tax-free in 2026 if they keep a Roth conversion at or under $92,000. The 2022 cut has cost them $46,075 so far, and a 10-year Treasury now pays about the same as the stock. The check looks safe. The price is the risk.

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