AT&T Prioritizes Buybacks While Altria Leans on Dividend
AT&T plans to hold its dividend at $1.11 per share and increase buybacks to about $10 billion in 2026, with its payout using 45% of free cash flow. Altria yields 6.5% and has grown its dividend per share by 4.1% annually from fiscal 2020 to fiscal 2025, but its payout consumed 78% of free cash flow. AT&T carries higher leverage and expects it to rise after the EchoStar deal, while Altria has lower debt and stronger interest coverage.
AT&T's second-quarter 2026 Advanced Connectivity revenue, covering fiber and wireless, increased 5.1% year over year to $23.5 billion. Its dividend consumed 45% of free cash flow in the twelve months through June 2026, leaving room for roughly $10 billion of 2026 repurchases while maintaining the $1.11 annual payout.
Altria's adjusted diluted EPS rose 4.9% to $2.80 in first-half 2026, with full-year guidance of $5.61 to $5.72. Its dividend used 78% of free cash flow, while net debt/EBITDA was 1.41x and interest coverage 13.27x, versus AT&T's 2.91x and 3.86x.
Income-focused investors, including retirees, may weigh AT&T’s steadier payout and buybacks against Altria’s higher yield. AT&T’s debt and EchoStar integration could affect its ability to sustain capital returns, while Altria’s cigarette volume declines and high payout ratio may influence dividend durability. Employees, suppliers, and communities tied to both firms could feel indirect effects if capital allocation shifts. The outcome may shape how savers view telecom and tobacco stocks as income sources.