AT&T The company currently pays out 39% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect T’s payout to increase to 58% of its earnings, which leads to a dividend yield of 6.8%. However, EPS is forecasted to fall to $2.68 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
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It is, The dividend us tied to the stock price. But T buy back stock often, share with this repurchase the plan is simple: to “return capital to shareholders” by spending money in a way that makes the stock go up and shareholders wealthier as a result.
In healthy institutions The primary idea is that buying back existing shares decreases the supply of outstanding stock,the comoany has surplus assets, cash, etc and gives existing shareholders a bigger piece of the company.
In T's case Should be illegal, but it is not, since T is not growing organically and with huge debt problem.
Fxg thanks for the explanation, you did not contradict me on the ponzi issue, that explanation should be target to the person who refers to ATT shares as a Ponzi scheme, if thats true all publicly traded companies including google, amazon, apple are Ponzi schemes. Remember in 1996 when apple was a few days away from bankruptcy? Nah most people dont remember. I would more say buying stock is more of a c-ap shoot. You take your chances. Sometimes it work, sometimes it dont. You dont like what you get, sell your shares and move on. Calling it a Ponzi scheme shows ones ignorance of how common or preferred stock work.
As for att, as an employee i have. Vested interest in it down well. I am concerned at the reduction in earnings, the high debt and the possibility of loosing my job. I wont leave voluntarily unless they offer me a better severance than they have been offering. I am 10 on the from qualifying for modify rule 75. When that occurs the only way I would voluntarily leave under the current severance is 1) if I get credible information that the current max 6 month severance will be reduced, or my side business explodes allowing me to replace my att income quickly.
lxw, this is going to take a minute to explain. When you buy stock on the retail market, you are buying it from a market maker i.e. brokerage, not AT&T directly. Whatever retail broker you use, like TD Ameritrade, will check the price on the market at the time of your transaction and match you to a seller. Usually, the seller is another TD Ameritrade customer, and the brokerage simply transfers the shares on their books from the other customer to you. Most retail trades will not hit the market directly. AT&T is not selling new shares to you. When AT&T sells new shares, they are sold on the market, and usually a brokerage or mutual fund will buy them.