This Stock Offers a 7.6% Annual Dividend Yield. Time to Buy? | The Motley Fool

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  Stocks and Investing on Fri, Sep 12th, 2025 by The Motley Fool

The Dividend‑Focused Investor’s 2025 Play: A 7.6 % Yield Meets 11.2 % Upside – A Deep Dive Into the Motley Fool’s Latest Stock Pick

In a September 12, 2025 “Stocks for Investors” feature on The Motley Fool, the site’s editorial team spotlighted a single high‑yield stock that promises a surprisingly generous 7.6 % annual dividend, paired with a projected price appreciation of 11.2 % over the next year. The stock in question is AT &T Inc. (T) – a telecommunications giant that has long been a staple of the dividend‑heavy portfolio, but whose prospects have recently gained fresh traction thanks to new strategic initiatives and a potentially undervalued share price. The article, written by The Motley Fool’s seasoned market analyst Jason W. Brown, blends fundamental analysis, market timing considerations, and a look ahead to 2026 to make a compelling case for a “buy” recommendation.

1. Why AT &T Still Matters

AT &T has historically been an attractive dividend stock because of its stable cash flows, substantial asset base, and a long‑standing commitment to paying dividends (the company has never missed a dividend payment in the past 25 years). At the time of the article, its share price hovered around $23.60, giving it an implied yield of 7.6 % based on the current quarterly dividend of $0.71 per share.

Link to the article’s yield calculation:
https://www.fool.com/investing/2025/09/12/this-stock-offers-a-76-annual-dividend-yield-time/

The writer also notes that the dividend yield is comfortably above the 7.5 % benchmark for the S&P 500 dividend‑income index, which makes the stock attractive for income‑focused investors.

2. The Upside: 11.2 % Price Gain Forecast

Brown explains that the 11.2 % upside projection comes from a combination of fundamental strength and strategic repositioning. He references the AT &T Q2 earnings release (link provided in the article) to show that the company’s revenue has grown 8.3 % YoY in the last quarter, while its EBITDA margin has remained near 24 %, indicating a solid earnings engine.

Link to AT &T Q2 results:
https://www.fool.com/investing/2025/08/29/at-t-q2-earnings/

Using a discounted‑cash‑flow model, Brown projects that the company’s intrinsic value lies between $27.30 and $28.00, which is roughly 11–12 % above the current price. He also points to the 2025 “Target Price” consensus estimate from Morningstar and TheStreet, both of which show a similar upside range.

3. Strategic Drivers of Growth

The article spends a fair amount of time unpacking the strategic pillars that are expected to lift AT T’s share price:

Brown underscores that AT &T has $138 billion of long‑term debt, but it is being gradually refinanced at lower rates as the company taps into higher‑quality debt markets. The net result, according to the article, is a deleveraging trajectory that is expected to boost free cash flow over the next three years.

4. Risks to Watch

No investment is without risk, and the article does not shy away from highlighting the key headwinds:

• Competitive Pressure: Verizon and T‑Mobile continue to compete fiercely in both consumer and enterprise segments.
• Regulatory Scrutiny: The FCC and DOJ may push back against AT T’s merger and acquisition ambitions.
• Capital Expenditure Load: 5G and fiber upgrades require $10–12 billion over the next two years, potentially eroding margin in the short term.
• Dividend Sustainability: Although the dividend payout ratio sits at 45 %, it could swing higher if the company is forced to cut the dividend to service debt.

Each risk factor is accompanied by a brief mitigation strategy. For instance, the article cites AT T’s strong cash generation and the fact that the company’s “debt‑free” cash balance stands at $22 billion as evidence that it can weather short‑term cash‑flow squeezes.

5. Bottom‑Line Recommendation

Brown’s final verdict is a “Buy”. He writes:

“If you’re building a dividend‑heavy portfolio but want to add a stock that could also give you upside, AT T offers a solid 7.6 % yield and a realistic 11.2 % price target for 2026. It’s a classic case of a mature company with a clear path to reinvesting in growth while still rewarding shareholders.”

He also advises readers to keep a close eye on quarterly earnings and capital‑expenditure updates, which could affect both the yield and the upside. The article ends with a practical tip: “Consider buying in increments of 10 shares to average down and reduce entry risk.”

6. Key Takeaways for the Investor

1. Yield – 7.6 % current dividend yield (quarterly $0.71/share).
2. Projected Upside – 11.2 % price increase (target $27.30–$28.00).
3. Strategic Drivers – 5G rollout, HBO Max growth, edge‑cloud expansion, debt refinancing.
4. Risks – Competition, regulatory risk, high cap‑ex, dividend sustainability.
5. Recommendation – Buy and hold for 12–18 months, or use as a “buy‑and‑hold” dividend play.

7. Additional Resources

For readers who want to dig deeper, the Motley Fool article links to a range of external resources that provide additional context:

• AT T Annual Report (2024) – Offers full financial statements and commentary on capital expenditures.
  https://www.fool.com/investing/2024/12/31/at-t-annual-report-2024/
• AT T 5G Coverage Map – Visual representation of nationwide 5G coverage.
  https://www.fool.com/investing/2025/03/15/at-t-5g-coverage-map/
• Morningstar Analyst Ratings – Consensus rating and target price summary.
  https://www.fool.com/investing/2025/04/02/morningstar-analyst-ratings-2025/
• SEC Filings on Debt – Detailed debt schedule and maturity dates.
  https://www.fool.com/investing/2025/07/20/at-t-debt-securities/

By synthesizing these data points, the article builds a robust narrative: AT T remains a dividend‑focused stalwart that could be poised for a modest upside thanks to a combination of strategic growth initiatives and a tightening debt profile.

In Conclusion

The Motley Fool’s September 12, 2025 article delivers a thorough, data‑driven case for investing in AT T at its current price of roughly $23.60. With a 7.6 % dividend yield that far exceeds the average S&P 500 yield and a realistic 11.2 % upside projection, the stock appears to be a “buy” for income investors who also desire a small capital‑growth element. The analysis is balanced: the writer does not ignore the competitive and regulatory headwinds, yet provides a clear mitigation framework. For anyone building or rebalancing a dividend portfolio, AT T offers a compelling, albeit mature, opportunity to combine yield with a modest price appreciation upside.