Last December, I published a positive analysis of AT&T Inc. (NYSE:T), suggesting it was a good buy for dividend investors. I pointed out three main reasons for this recommendation:

1. AT&T’s stock was trading at low multiples typically seen in companies with volatile cash flows.
2. The company was improving its free cash flow due to better CapEx management and business growth.
3. The dividend sustainability had improved following recent cuts and stronger cash generation.

Despite past mistakes in value destruction from M&A deals and debt accumulation, investing in AT&T back then has paid off with a 16% total return since December. The company’s Q4 2023 earnings report further supported my bullish stance, showing continued positive performance.

Looking at the latest Q1 2024 earnings, AT&T has maintained its growth momentum. Mobility service and fiber revenues increased, while wireline sales slightly decreased. The company also reported improved margins and operating leverage across key business lines, indicating a positive trend in its financial performance.

AT&T’s free cash flow has stabilized, allowing management to focus on deleveraging the business. The company ended Q1 2024 with a net debt to adjusted EBITDA ratio of 2.9x, on track to reach the target of 2.5x by Q1 2025. With a well-laddered debt maturity profile, AT&T can manage its interest expenses efficiently while reducing debt over time.

Given the positive earnings and financial outlook, AT&T may consider increasing its dividend payout in the future. With a focus on financial stability and shareholder value, the company aims to strike a balance between rewarding investors and maintaining a healthy capital structure.

In conclusion, AT&T’s strategic shift towards operational improvement and debt reduction bodes well for long-term investors, especially those seeking dividends. The stock may offer further upside potential as the company continues to grow its EBITDA and optimize its balance sheet. Overall, I remain optimistic about AT&T’s prospects and believe it could be a valuable addition to a dividend-focused portfolio.