officially separated its media business, with
Discovery of Warner Bros.
trading alone for the first time on Monday.
AT&T (ticker: T) cut its dividend as part of the spinoff — a point of contention for many AT&T shareholders — but the payout remains generous at $1.11 a year per share. Based on Monday’s closing price of $19.63 per share, the dividend yield is 5.7%. This places it among the 10 highest paying stocks in the
AT&T completed its spin-off from WarnerMedia on Friday, and the shares began trading separately on Monday. The telecom operator’s media segment was later merged with Discovery to create Warner Bros. Discovery (WBD).
This revamp refocuses AT&T on its telecommunications business in 5G wireless and wireline fiber optic broadband. But that means a smaller business and with many capital-intensive investment needs. A dividend cut was part of the move.
The total dividend payout for AT&T stock was $2.08 per share in 2021, before the WarnerMedia split, with the stock yielding north of 8%. The company was kicked off the Dividend Aristocrats index because it failed to increase its dividend last year.
AT&T’s first dividend at the reset rate will be paid on May 2, with a record date of April 14. The amount of the quarterly dividend will be 27.75 cents per share.
AT&T’s dividend commitment will total about $8 billion per year, for a payout ratio of about 40% of management’s forecast for 2023 free cash flow of about $20 billion.
As part of the split, AT&T shareholders received approximately 0.24 shares of Warner Bros. Discovery for every AT&T share they held, in the form of a stock dividend. That’s worth about $5.95 per share based on WBD’s closing price of $24.78 on Monday.
The media company does not currently intend to pay a dividend, but investors can get more than five years of AT&T dividend payments up front by selling those shares if they choose. Or they can put that money back in AT&T stock.
(Learn more about Barrons on how to handle the tax implications of the split.)
Other top S&P 500 returns include
(MO), 6.7%; and
(DVN), at 6.6%.
Write to Nicholas Jasinski at [email protected]