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AT&T (NYSE: T) shareholders have plenty to celebrate, with the stock up 24% thus far in 2025. The telecommunications giant has presented robust earnings, reinforcing an optimistic long-term outlook. The stock's impressive performance is an outlier next to the 3% decline in the S&P 500 index year to date. As such, AT&T has emerged as a reliable source of stability amid the broader stock market volatility that's causing concern about the strength of the U.S. economy.
Can AT&T's record-setting rally continue, or is it time to hang up the phone? Let's discuss where the stock could be headed one year from now.
Operating and financial momentum into 2025
It's been nearly three years since AT&T completed one of the largest restructuring efforts in its history -- spinning off the WarnerMedia group in 2022. The deal marked a pivot away from the media and entertainment business, allowing the company to refocus efforts on its core telecom strengths. This strategic pivot has proven successful. Today, AT&T carries far less debt and generates more durable cash flow, gaining the flexibility to invest in growth areas like 5G and fiber optics infrastructure.
For the full year ended Dec. 31, AT&T's wireless service revenue grew 3.5% year over year, driven by the addition of 1.4 million net postpaid subscribers coupled with gradual price hike initiatives. Broadband services saw even stronger momentum, with annual revenue rising 7.2%, led by an 18% surge in fiber revenues compared to 2023.
AT&T notes that approximately 40% of its fiber customers also have a wireless plan, up from 35% in 2021. This trend highlights its ability to cross-sell services and deepen customer relationships within a highly valuable and loyal subscriber base.
For 2025, AT&T expects further growth while setting a free-cash-flow target of at least $16 billion, an increase of $700 million compared to 2024. This figure excludes the company's remaining stake in DIRECTV, which AT&T has agreed to sell, receiving an additional $7.6 billion in cash when the deal closes, expected to close in the second half of the year.
Perhaps even more significant is the growing confidence in the sustainability of AT&T's quarterly dividend, which remains at $0.28 per share, offering a yield of 3.9%. The annualized dividend payout ratio represents approximately 55% of the company's 2025 earnings per share (EPS) guidance of $1.97 to $2.07. Additionally, AT&T has announced plans to move forward with a $10 billion share repurchase, reaffirming its commitment to reward shareholders.