We recently published a list of 12 Highest Dividend Stocks to Buy on Cash App. In this article, we are going to take a look at where AT&T Inc. (NYSE:T) stands against other highest dividend stocks to buy on cash app.
Technology has seamlessly woven itself into our daily lives in today’s digital era, significantly impacting how we manage finances. The shift from physical wallets to digital platforms is becoming increasingly common. Cash App has become a prominent player in the digital financial space, steadily growing in popularity. This mobile payment service allows users to send, receive, and request money from individuals and businesses alike. Since its launch in 2013, Cash App has become one of the most widely used digital wallets in the US, competing with other platforms like Venmo and Zelle. The Consumer Financial Protection Bureau (CFPB) reported that Cash App now boasts over 56 million accounts, with Block, its developer, earning over 50% of its gross profit from the app in 2023.
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The pandemic served as a catalyst, speeding up the rising trend of app usage, especially in the financial sector. With lockdowns and social distancing measures in place, people increasingly relied on online platforms for shopping, highlighting the importance of contactless payments. This change in consumer habits drove a surge in app usage, enabling a smooth transition to remote and contactless transactions. Zelle, the peer-to-peer money transfer app, reported a 27% increase in network transactions during the first half of 2024, with nearly $500 billion in payments processed. In the first six months of the year, consumers and businesses completed 1.7 billion transactions across 143 million accounts, as reported by Bloomberg.
This mainly highlights the promising future of online payments and their continued growth across upcoming generations. In fact, Block CFO Amrita Ahuja shared with CNBC’s Jim Cramer that Cash App’s payment services are particularly popular among younger consumers. Ahuja pointed out that the Cash App card, a free Visa debit card, has gained significant traction with this demographic. She also highlighted that Cash App successfully engages the younger generation through initiatives like a family program, which enables adults to sponsor accounts for teenagers.
That said, with success comes increased risk. Recently, Cash App has faced challenges, as the CFPB accused the platform of enabling widespread fraud and misleading its users. In 2023, Hindenburg Research, a well-known short seller, claimed that Block had inflated the number of Cash App users and highlighted illegal activities on the app. Block dismissed the report as “factually inaccurate and misleading.” In its enforcement action, the CFPB stated that Block is legally obligated to investigate and resolve disputes regarding unauthorized transactions, but described the company’s efforts as “severely lacking.” Instead, Block reportedly directed users to request their banks to reverse transactions, which Block would subsequently deny. As a result, Block will pay up to $120 million in refunds to consumers, establish a 24-hour customer service program, and pay a $55 million fine.
Across different investment platforms, investors consistently prioritize generating cash flow. This focus on cash generation drives them towards dividend stocks, which are well-known for offering shareholders a steady stream of income.
Our Methodology
For this article, we reviewed multiple reliable websites and videos that discuss dividend stocks available on Cash App. Our goal was to identify stocks that were consistently recommended by credible sources and analyst reports. After analyzing the gathered information, we selected 12 stocks that stood out due to their dividend yields exceeding 4% as of January 21. These stocks are ranked in order of their dividend yields, starting from the lowest. We also considered hedge fund sentiment around each stock using Insider Monkey’s data for Q3 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
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AT&T Inc. (NYSE:T)
Dividend Yield as of January 21: 4.94%
AT&T Inc. (NYSE:T) is an American telecommunications, media, and technology services company that provides a wide range of services to its consumers. Over the past year, the stock has seen a nearly 34% increase in its stock price, driven by improved fundamentals like higher gross margins and lower debt levels. In Q3 2024, the company also revealed the sale of its remaining 70% stake in DirecTV to private equity firm TPG, a move that will provide substantial cash flow to reduce debt further and deliver value to shareholders. With a strong balance sheet, rising share price, and attractive dividend yield, AT&T is becoming an appealing choice for income-focused investors.
In recent years, AT&T Inc. (NYSE:T) has steadily grown its wireless and fiber internet subscriber base. From September 2022 to September 2024, it added about 7.5 million wireless customers. In addition, it gained more than two million fiber subscribers during this time, helping to offset the decline in demand for traditional wireline services. TCW Funds stated the following about AT&T Inc. (NYSE:T) in its Q3 2024 investor letter:
“AT&T Inc. (NYSE:T), based in Dallas, TX, is a nationwide provider of voice, video, and data communications services to businesses and consumers in the wired, wireless, and broadband. At initiation, the stock had a $141 billion market capitalization and met all five valuation factors with an above market dividend yield of 5.6%. From a sustainability prism, the company completed its commitment to invest $2 billion by the end of 2023 to help bridge the digital divide. AT&T is working on enabling low-income households to access to low-cost broadband services through its Access service plan as well as reaching out to more rural communities and Tribal lands where internet access remains a challenge. It is nearly 85% the way to providing one million people in need with digital resources through AT&T Connected Learning® with the goal to be reached by the end of 2025. In 2020, the company announced that it is committed to be carbon neutral by 2035 with zero carbon emission across all operations. It is deploying Smart Climate Solutions – through efforts like its Connected Climate Initiative – that will help enable its business customers to reduce their emissions as well. The company’s goal is to help collectively reduce its emissions by one billion metric tons – a gigaton – by 2035, compared to 2018 levels. The primary catalysts are new/strong management and restructuring. John Stankey was appointed CEO in July 2020 and he is committed to refocusing the company and improving its financial performance. The company combined its WarnerMedia operation with Discovery during 1Q:22 which eliminated AT&T’s exposure to the rapidly evolving media industry and refocused its core telecommunication business thus eliminating a major drag on profitability and the company’s balance sheet by reducing long-term debt from a peak $176 billion during 2020 to $142 billion at the end of June 2024 quarter. AT&T is moving aggressively to reduce cost and sell non-core assets such as its advertising platform Xander to Microsoft† which was accomplished during 2022. The company has redesigned its network to be software driven structure reducing the capital investment cycle in its national network – resulting in a network that is flexible with unrivaled speed and reliability – thus enhancing its nationwide position. By the end of 2023, it expanded its 5G network to reach more than 302 million people in nearly 24,500 cities and towns in the U.S. The company’s mid-band 5G+ network alone grew to cover more than 210 million people. AT&T is one of the largest investors in digital infrastructure in the U.S. Over the five years ending 2023, the company invested nearly $150 billion primarily in its wireless, fiber optics, and wireline networks. The extensive restructuring and refocusing of AT&T on its core business should result in improved earnings and cash flow while at the same time reducing uncertainty for shareholders.”
AT&T Inc. (NYSE:T) has remained committed to returning value to shareholders as the company plans to distribute over $40 billion to its shareholders via dividends and share buybacks within the next three years. The company’s cash generation remained stable in the most recent quarter, with its operating cash flow and free cash flow coming in at $10.2 billion and $5.1 billion, respectively. It currently offers a quarterly dividend of $0.2775 per share and has a dividend yield of 4.94%, as of January 21.
With a collective stake value of more than $5.6 billion, 59 hedge funds tracked by Insider Monkey held positions in AT&T Inc. (NYSE:T) at the end of Q3 2024. Arrowstreet Capital was the company’s leading stakeholder in Q3.
Overall, T ranks 6th on our list of highest dividend stocks to buy on cash app. While we acknowledge the potential for T as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than T but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
