Is AT&T's 7.6% Dividend Safe?

When analyzing a dividend stock, pretty much every piece of advice will tell you to avoid stocks paying higher than a 5% or 6% dividend. This is because the market has dropped the stock's share price significantly due to poor business outlook, which typically requires a dividend cut. So a red flag goes up when investors see AT&T's (T -1.51%) juicy 7.6% dividend yield. But is AT&T's dividend cause for concern? Or are investors safe to invest in the stock? Let's take a look.

When the Federal Reserve decides to reduce interest rates, there will likely be a renewed interest in high dividend-yielding stocks like AT&T, and the stock could see a boost when that happens. However, it's unknown when that will occur so investors will need to be patient. Fortunately, AT&T pays investors a handsome 7.6% dividend yield that is quite safe and can likely be increased as investors wait for this catalyst.

Source: Motley Fool

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