AT&T Inc. reported third-quarter results on October 21 that beat Wall Street expectations on both lines. The telecom raised its 2026 profit outlook and reaffirmed its $1.11 annualized dividend, even as impairment charges tied to its Mexico business dented reported net income.
The setup
Adjusted earnings per share reached $0.65, ahead of the $0.60 consensus and up from $0.54 a year earlier. Revenue of $32.3 billion grew 5.3 percent year over year, the best consolidated service revenue growth in more than four years. Shares recovered from an early dip and traded near $22.73 by the next session.
Reported diluted earnings came in at $0.13, pulled down by a non-cash impairment on the held-for-sale Mexico wireless business and employee separation charges. AT&T agreed in October to sell that unit for $2 billion in cash, with proceeds directed toward debt reduction and shareholder returns.
Key numbers from the quarter
| Metric | Q3 2026 result | Year-over-year change |
|---|---|---|
| Revenue | $32.3 billion | +5.3% |
| Adjusted diluted EPS | $0.65 | Up from $0.54 |
| Adjusted EBITDA | $12.5 billion | +5.4% |
| Free cash flow | $5.0 billion | Up from $4.9 billion |
| Postpaid phone net adds | 379,000 | Churn 0.92% |
| Internet net adds | 769,000 | Record quarter |
The 769,000 internet additions set a company record, split between 442,000 fiber and 327,000 fixed wireless customers. Postpaid phone churn held at 0.92 percent. AT&T returned $4.8 billion to shareholders during the quarter, including $2.8 billion of stock repurchases.
Dividend income math for income investors
AT&T remains one of the largest dividend payers in the market by total dollars. At $22.73 per share, the $1.11 annualized dividend yields roughly 4.9 percent, with a payout ratio near 37 percent of earnings.
| Income scenario | Approximate value |
|---|---|
| Shares per $100,000 at $22.73 | 4,400 shares |
| Annual dividend income per $100,000 | $4,880 |
A retiree with $100,000 in AT&T stock collects about $4,880 in annual dividend income at the current rate. The next $0.2775 quarterly payment lands November 2 for shareholders of record on October 12. Management also plans $45 billion or more of dividends and repurchases across 2026 through 2028.
What to watch
Fiber momentum is the core of the story. The company passed 39 million fiber locations and remains on track for 40 million by the end of 2026 and more than 60 million by 2030. This was the second straight quarter with more than one million Advanced Connectivity customer additions.
The raised 2026 adjusted EPS outlook of $2.40 sits above the $2.34 consensus. Free cash flow guidance held at $18 billion or more this year, $19 billion or more in 2027, and $21 billion or more in 2028. That trajectory covers the dividend with room to spare.
Risks to watch
- Competition. Reports in early October that SpaceX would acquire spectrum and enter U.S. mobile service hit telecom valuations across the sector.
- Debt burden. The company targets a 2.5x net debt-to-adjusted EBITDA ratio by 2029, and higher interest rates raise the cost of getting there.
- Legacy decline. Copper network decommissioning keeps shrinking older revenue lines even as fiber grows.
Bottom line
The quarter strengthened the income case. A 4.9 percent yield, a payout ratio near 37 percent, and rising free cash flow guidance give the dividend a wide cushion. Fiber growth is doing the heavy lifting.
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