Here's How Many Shares of AT&T You Must Own to Make $5,000 in Annual Dividend Income

More than 100 million Americans use AT&T's (NYSE: T) products and services. So do nearly 2.5 million businesses. How many investors rely on A&T's stock to generate reliable dividend income? I don't know the number, but I suspect it's significant. AT&T has been a longtime favorite for many income investors.

How much dividend money could you make by owning AT&T? It depends on how much of the stock you buy. Here's how many shares of AT&T you should own to make $5,000 in annual dividend income.

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Image source: AT&T.

The magic number

I have good news for anyone who doesn't like math. We don't have to use calculus or pull out the quadratic formula to figure out how many shares of AT&T are needed to make $5,000 per year in dividend income. Only simple multiplication and division are required to determine the magic number.

First, we'll need to know how much AT&T pays in dividends per year. (I'll assume we're talking about the company's common stock, by the way. AT&T also has preferred stock with different dividend amounts.) The telecommunications giant's most recent quarterly dividend payment for its common stock was $0.2775 per share. If we multiply that number times four, we'll get an annualized dividend payment of $1.11 per share.

Second, we need to divide the desired annual dividend income of $5,000 by $1.11 per share. This gives us a result of 4,504.5. That's the number of shares needed to make $5,000 in annual income at the current dividend level.

Because this isn't a round number, we have a choice. We can settle for slightly below $5,000 in income by buying 4,504 AT&T shares. We can use an online broker that supports trading with fractional shares to buy exactly 4,504.5 shares. Or we can round up to 4,505 shares and make a little over $5,000. My personal preference would be the last option, which would cost you in the ballpark of $123,031 at the share price as of this writing.

But a potentially changing number

This magic number could change, though. How? AT&T's dividend payout could be different in the future than it is now. Dividends can go up, or down.

Going into 2022, AT&T had increased its dividend for 36 consecutive years. However, the company's spinoff of its entertainment unit (which became Warner Bros Discovery) resulted in a 46% dividend cut.

Should AT&T's board of directors decide to lower the dividend again, you would need more shares to earn $5,000 in annual dividend income. However, the company could also increase its dividend.

Granted, AT&T hasn't boosted its dividend payout since the 2022 cut, but one of the telecom giant's top business priorities is to allocate capital in a way that "provide[s] an attractive dividend with improved quality." AT&T's forward dividend yield of over 4% is already attractive. Should its share price continue to climb, though, the board could view a dividend increase as a needed move to keep its dividend attractive to income investors.

How safe is AT&T's dividend now?

AT&T's dividend payout ratio is roughly 68%. This indicates the company should have ample financial flexibility to continue paying dividends at least at current levels.

However, the earnings used in calculating dividend payout ratios can sometimes be misleading. Is that the case with AT&T? Fortunately, no. The telecom leader paid around $2.03 billion in dividends in the first quarter of 2025. It generated free cash flow in Q1 of $3.1 billion. AT&T's payout ratio based on free cash flow is around 65.5%. Again, that should be more than enough for the company to keep the dividends flowing without any cuts.

The bottom line is that AT&T's dividend appears to be relatively safe. And that means you should be able to make at least $5,000 in annual dividend income (with some pocket change to spare) if you have the money available to invest in 4,505 shares.

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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Warner Bros. Discovery. The Motley Fool has a disclosure policy.