Since 2008, AT&T has established the custom of raising its quarterly dividend by a penny per share, or $0.04 annually. That pattern has taken the $1.60 dividend in 2008 up to $1.88 here in 2015. The slow rate of dividend growth during these past seven years has served an important purpose: It has given AT&T the chance to increase the amount of its annual profits that aren’t earmarked for dividends. Retained earnings are in important ingredient in establishing future growth because it represents the available cash to sink into new initiatives without having to borrow from banks or dilute shareholders.
In the past ten years, the dividend has gone from consuming 83% of AT&T’s profits to 68% of AT&T’s profits now. That starts to give the company wiggle room for buybacks, growth investments, acquisitions, or even dividend bumps at a faster pace. Lately, there has come news that AT&T will … Read the rest of this article!