Is Former Dividend Aristocrat AT&T a Buy After Q2 Earnings?

Key Points

• After 36 years, AT&T lost its status as a Dividend Aristocrat in 2022. 
• The company’s Q2 earnings show certainty in a market clouded with uncertainty.
• The One Big, Beautiful Act should prove to be a boon for AT&T’s bottom line. AT&T Stock Rises on Earnings Beat and Share Buybacks

The communication services sector is having a strong year. Its 11.41% gain in 2025 makes it the third-best performer among the S&P 500’s 11 sectors, easily outpacing the index’s 7.28% gain. It’s been a similar story for legacy telecom company AT&T NYSE: T, which has seen its stock rise by more than 19%.  

That strong performance was bolstered on Wednesday when the company reported Q2 financials before market open. AT&T announced EPS of 54 cents, topping the consensus estimate of 51 cents, resulting in a trailing 12-month (TTM) price-to-earnings (P/E) ratio of 16.79.  

However, after breaking a 36-year streak of consecutive annual dividend increases, the company lost its Dividend Aristocrat status in 2022. Since then, its payout has held steady at 27 cents, down from a high of 52 cents in Q1 2022. But with strong forward guidance, is it time for income investors to reconsider AT&T? 

What AT&T’s Q2 Earnings Can Tell Us

When the company reported Q2 results, it announced:

• Revenues of $30.8 billion vs. $29.8 in Q2 2024
• Net income of $4.9 billion vs. $3.9 billion in Q2 2024
• Cash from operating activities of $9.8 billion vs. $9.1 billion in Q2 2024
• Free cash flow of $4.4 billion vs. $4.0 billion in Q2 2024

Looking forward, AT&T’s earnings are expected to grow 6.07% next year from an annualized $2.14 per share to $2.27 per share. Underscoring that growth is the stock’s forward P/E ratio of 13.30, marking a 20.78% improvement over its TTM P/E multiple. 

Looking at the company’s business segments, growth was seen nearly across the board. Mobility service revenues increased 3.5% year over year (YOY) to $16.9 billion. Consumer fiber broadband revenues were $2.1 billion, up 18.9% YOY. A&T reported 401,000 postpaid phone net adds in Q2, alongside 243,000 AT&T Fiber net adds, and 203,000 AT&T Internet Air net adds.

Icing on the cake, the telecom giant repurchased approximately $1 billion of its common shares as part of an enhanced shareholder return program that includes a $10 billion share repurchase authorization. On July 2, it also closed the sale of its entire remaining 70% stake in DirecTV, marking AT&T’s complete exit from the satellite television provider. 

The company expects to realize $6.5 to $8 billion of tax savings from 2025 to 2027 as a result of the Trump administration’s One Big, Beautiful Bill Act. That’s forecast to result in estimated savings of $1.5 to $2 billion in 2025 and $2.5 to $3 billion in both 2026 and 2027.

Wall Street Is Bullish Despite AT&T’s Diminished Dividend Status 

AT&T may have lost some of its luster when its Dividend Aristocrat status was removed in 2022. However, for investors on the hunt for a stock that provides both growth and income, AT&T’s current dividend yields 4.06%, or $1.11 per share annually. 

That’s something the smart money is already on to. Short interest in AT&T stands at 89.35 million of its 7.19 billion public float—or just 1.24%. Meanwhile, institutional ownership is 57.10%, with 1,996 holders having increased their positions over the past year compared to 1,553 that have decreased them. 

Much of that is rooted in AT&T’s competitive moat, which isn’t wide but is certainly well-established. The company faces considerable competition from telecom mainstays like T-Mobile US NASDAQ: TMUS and Verizon Communications NYSE: VZ, but its proven ability to scale and retain customers has been critical to its recent success. That’s a large part of why AT&T expects its mobility service revenue to continue growing at 3% or better on an annualized basis. 

AT&T's wireless business segment is currently the third-largest provider in the United States. Additionally, the company’s communications infrastructure is expansive, reaching 290 million people in approximately 24,000 cities and towns. Since 2019, AT&T has invested more than $145 billion in the buildout of that network, including thousands of miles of fiber and 5G.

AT&T Stock Price Target and Rating         

All of that culminates in a consensus Moderate Buy rating, with 18 of 25 analysts covering AT&T assigning it a Buy rating, six assigning it a Hold rating, and just one assigning it a Sell rating. 

Looking down the line, the stock’s average price target is $29.17, or 6.04% potential upside from where it’s trading today.