AT&T Inc. (NYSE:T) shares closed Thursday's regular session up 2.8% at $23.71, staging a rebound after a 1.4% decline in the prior session amid a telecom sector selloff. The recovery comes as investors weigh the company's robust cash-return profile against competitive threats from SpaceX's Starlink.
The telecommunications giant, with an equity value of approximately $162.4 billion based on about 6.85 billion shares outstanding, is projecting total dividends and share repurchases of roughly $17.6 billion for 2026. That implies an estimated cash-return yield of 10.8% of market capitalization, according to initial calculations. The planned payouts are close to the company's minimum free-cash-flow target of at least $18 billion for the year.
Breaking down the numbers, the annual dividend of $1.11 per share amounts to about $7.6 billion, representing 4.7% of market value. Share repurchases are expected to total roughly $10.0 billion, or 6.2% of market cap. Combined, these returns equal about 98% of the free-cash-flow floor. As AT&T continues its buyback program, dividend expenses are expected to decline on a per-share basis.
The stock's bounce on Thursday mirrored a broader recovery across the telecom sector. Verizon Communications (NYSE:VZ) rose 0.7%, and T-Mobile US (NASDAQ:TMUS) gained 3.8%, following Wednesday's declines sparked by SpaceX President Gwynne Shotwell's remarks about building terrestrial mobile infrastructure to compete with traditional carriers. Analysts, however, remain skeptical about the near-term threat. Craig Moffett of MoffettNathanson called the prospect of a rival direct service emerging within five years "extraordinarily challenging" without a carrier partnership.
AT&T's valuation remains attractive relative to peers, with a trailing price-to-earnings ratio of 7.8x, compared to 12.2x for Verizon and 18.8x for T-Mobile. The discount persists despite stronger operating performance. In the second quarter, AT&T reported 432,000 net postpaid phone additions, well above the FactSet consensus of 338,500. Revenue grew 2.3% year-over-year to $31.6 billion, adjusted EBITDA rose 5.1% to $12.3 billion, and adjusted EPS increased 20.4% to $0.65. Free cash flow also improved 6.8% to $4.7 billion.
Broadband continues to be a growth driver. AT&T added 367,000 new fiber customers and 279,000 fixed-wireless net adds, with 42.5% of advanced internet subscribers also taking wireless services. "The cross-selling they have been working toward is now apparent in the figures," said David Wagner, head of equity at Aptus Capital Advisors, a shareholder.
However, the cash-return story is tempered by balance-sheet pressures. AT&T reported net debt of $126.4 billion at the end of June, with capital expenditures projected between $23 billion and $24 billion annually through 2028. Executives expect leverage to approach 2.5 times roughly three years after its spectrum deal. These obligations could limit flexibility if cash flows falter.
Analyst sentiment is cautiously optimistic. Among 28 ratings, the consensus is "Buy," with an average price target of $28.65—implying a 20.8% upside from Thursday's close. Targets range from $20 to $36. Notably, a single "Sell" rating has emerged, indicating growing debate about the stock's prospects.
Looking ahead, the July employment report is due Friday at 8:30 a.m. EDT, followed by consumer and producer price data in mid-August. With no major company events scheduled, interest rate moves and any further SpaceX commentary are likely to drive near-term sentiment. Risks remain, including potential price pressure from Starlink and the heavy capital expenditure requirements that could strain cash flow if economic conditions deteriorate.
