AT&T Raises Dividend, May Buy $8.77 Billion in Stock

AT&T Inc., the largest U.S. phone company, boosted its dividend for the 27th consecutive year and said it will buy back as many as 300 million shares as wireless- customer gains help its cash flow.

AT&T raised its quarterly dividend 2.4 percent to 43 cents from 42 cents, representing a 6.5 percent yield on the carrier’s average share price this year. Analysts including Piper Jaffray & Co.’s Chris Larsen and Credit Suisse Group AG’s Jonathan Chaplin, both based in New York, expected 43 cents.

The carrier said in a statement its board authorized a plan to repurchase as many as 300 million shares, marking the first buyback announcement in three years. At yesterday’s closing price, the buyback would cost about $8.77 billion. The company’s market capitalization is about $172 billion.

AT&T, based in Dallas, boosted revenue by $847 million last quarter from a year earlier to $31.6 billion. Chief Executive Officer Randall Stephenson has attracted 6.1 million wireless customers this year with devices such as Apple Inc.’s iPhone.

“The announced repurchase authorization has no expiration, which gives AT&T more flexibility” for other uses of cash, such as a spectrum purchase, said Chaplin in a note today. “We expect AT&T to be in the market repurchasing shares in due course, which should be a positive for the stock.”

Credit Suisse’s Chaplin had predicted a share repurchase plan of as much as $12 billion, while Piper Jaffray’s Larsen said it would be between $8 billion and $10 billion.

AT&T in 2007 set out to buy back about 400 million shares by the end of 2009. It bought 164.2 million shares in 2008 for $6.1 billion and 133,000 in 2009 for about $3 million, according to company statements.

The carrier generated $11.6 billion of free cash flow in the first three quarters, down 16 percent from a year earlier.

AT&T fell 2 cents to $29.21 at 4 p.m. in New York Stock Exchange composite trading. The shares have added 4.2 percent this year.

To contact the reporter on this story: Greg Bensinger in New York at gbensinger1@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

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