My Top Dividend Stock for 2026

2025 was the year of artificial intelligence , with AI-related stocks booming. However, there's a real risk that the AI industry is careening toward a reckoning as excessive debt-fueled spending on infrastructure raises questions about a potential bubble. AI stocks could still be big winners in 2026, but there are no guarantees.

For investors seeking a safer bet, a high-quality dividend stock that's not tied to the AI bonanza could be a great idea. With shares of telecom giant AT&T (NYSE: T) down significantly over the past few months, now is the perfect time to add the high-yield dividend stock to your portfolio.

Image source: AT&T.

Consistent growth in wireless and fiber

Although there are only three major players in the U.S. wireless market, competition remains fierce. The industry is prone to periods of heavy promotional activity as AT&T and its rivals battle for new subscribers.

Despite a competitive environment, AT&T's wireless business has been thriving. The company has consistently added more than 300,000 net postpaid phone subscribers each quarter, going back to at least early 2023. Customer churn has also remained low, with postpaid phone churn of just 0.92% in the third quarter of 2025.

AT&T's fiber internet business is also doing well. The company has been adding at least 200,000 new net consumer fiber subscribers per quarter, driven by the expansion of its fiber network. At the end of the third quarter, AT&T's fiber network passed more than 31 million locations with a 40% consumer penetration rate.

Around 4.2 million customers paid for both fiber and wireless service in the third quarter. These so-called converged customers are valuable for AT&T, as they're less likely to switch providers and generate more lifetime revenue. As the fiber network expands, AT&T has ample room to grow its converged customer base.

A sustainable dividend and buybacks

AT&T hasn't raised its dividend in years. The current quarterly dividend sits at $0.2775 per share, good for a dividend yield of approximately 4.5%. While the lack of dividend increases is not ideal for investors, the company has been focused on improving its balance sheet following various expensive misfires in the media industry.

It's not clear whether a dividend increase is likely anytime soon. While the balance sheet has improved, the company recently announced a $23 billion deal to buy spectrum licenses, which will require some additional work to bring debt levels down. Investors should be prepared for a largely stagnant dividend payment for the time being.

Even so, AT&T's 4.5% dividend yield is attractive, and the dividend is well covered by free cash flow. With the company expecting to generate free cash flow above $16 billion in 2025, the dividend will consume slightly less than half of that total.

AT&T hasn't changed its capital return plan despite the spectrum deal. The company still expects to have the capacity to spend $20 billion on share buybacks through 2027. Reducing the share count will boost per-share earnings and lower the company's overall dividend payments, potentially paving the way for a dividend hike in the future.

An attractive valuation

With a market capitalization of around $177 billion, AT&T stock trades for just 11 times free cash flow guidance. AT&T is a slow-growing company, but there's room for free cash flow to expand as the company targets more converged customers. In late 2024, the company predicted that its free cash flow would top $18 billion in 2027.

On top of a growing free cash flow and the prospect of meaningful share buybacks over the next few years, AT&T's dividend is nothing to sneeze at. Although dividend growth may be unlikely, investors can still secure a 4.5% dividend yield, along with the potential for capital appreciation. Going into 2026, it's tough to find a more attractive dividend stock than AT&T.

Timothy Green has positions in AT&T. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.