The Biggest Dividend in America

It pays more dividends than any other company in the United States.

In total, it distributes more than $2.5 billion every quarter, or about $10.2 billion each year. That's more than the annual gross domestic product of Nicaragua, Barbados, The Bahamas or Madagascar. In fact, it's enough money to purchase Netflix (Nasdaq: NFLX), Royal Caribbean (NYSE: RCL), or LinkedIn (Nasdaq: LNKD) outright.

And this isn't some special one-time dividend. This company has paid a dividend for decades... and raised payments for 28 consecutive years. That includes through the 2008-2009 downturn.

 

Right now the stock pays a 5.6% yield. But dividends are growing quickly. In the past decade, the dividend payment is up 72%.

That dedication to dividends has paid off. Today, AT&T (NYSE: T) pays more in dividends than any other company.

I don't think I need to tell you too many details about AT&T's business for you to know where those dividends come from. As one of the nation's largest telecoms, the company earns a bundle in recurring revenue for providing wireless, digital cable and Internet services.

But can the company continue to pay its massive dividends... and continue to grow them?

AT&T certainly seems confident they can. In fact, in January the company announced a $9 billion buyback plan (equal to about 5% of shares outstanding). Reducing the share count will allow for more flexibility in meeting the dividend.

Meanwhile, the rise of smartphones has business booming. Last quarter, smartphone activations were up 60% year-over-year... helping lead to a 10% rise in wireless revenue.

But the truth is, AT&T's yearly results were down in 2011 compared with 2010. In fact, the company saw net income of just $0.66 per share for the year -- well below the $1.76 per share it pays in dividends.

The main reason for its low earnings is one-time events that occurred in the fourth quarter -- pension charges and a break-up fee from its failed buyout of T-Mobile. Taking out those one-time expenses, the company earned $2.20 per share -- more than enough to cover the dividend.

Risks to Consider: There's no doubt AT&T is facing some headwinds. Large debt and a capital-intensive business take up money that could otherwise be used for dividends.

> But there is also little doubt the company is dedicated to paying -- and increasing -- dividends to its investors. After all, you don't pay more than $10 billion a year in dividends if you aren't serious about putting money in your investors' pockets.