BUSINESS

Passive income sounds like a dream. But for income investors, it’s a real strategy — and one that doesn’t require picking high-risk, high-reward stocks to pull off.AT&T has been one of the most popular dividend stocks in America for years. It’s a name most people recognize, it pays a quarterly dividend, and it gives investors a way to generate income without having to sell a single share.The question is: How much do you need to invest to hit that $1,000-a-year income target?The math is surprisingly simple. And the business behind it is more interesting than many investors realize right now.Buy 901 AT&T shares for $1,000 in annual dividendsAT&T (T) stock is currently trading at $28.99. The company pays an annualized dividend of $1.11 per share, or about $0.2775 per quarter.To figure out how many shares you need, divide your target annual income by the per-share payout: $1,000 ÷ $1.11 = approximately 901 shares.To buy 901 shares at $28.99 each, you’d need to invest roughly $26,120.That’s not a small sum. But for income-focused investors building a portfolio of dividend stocks, it’s a concrete figure that makes planning a lot easier.AT&T’s key dividend metrics:Stock price: $28.99Annualized dividend per share: $1.11Dividend yield: About 3.83%Quarterly dividend per share: Approximately $0.2775Shares needed for $1,000/year: About 901Estimated investment needed: Close to $26,120Payout frequency: QuarterlyFree cash flow (2025):$16.6 billionThe yield itself — just under 4% — isn’t flashy by dividend stock standards. But what matters here is reliability. The annual dividend expense for AT&T stock is about $7.75 billion, which indicates a payout ratio of less than 50% in 2025. More on dividend stocks:Macy’s new AI tool drives 400% sales jump for the dividend stockMega-cap dividend stock targets $9 trillion valuationEnergy Transfer stands out as high-yield dividend stockAnalysts forecast AT&T’s free cash flow to increase from $16.6 billion in 2025 to $22.7 billion in 2030, which could support further dividend hikes. AT&T has been paying its dividend consistently, and the underlying business gives investors real reasons to feel comfortable about that continuing.AT&T’s dividend payout is sustainable AT&T CEO John Stankey laid out a clear case on the company’s fourth-quarter 2025 earnings call. The telecom giant met or exceeded every piece of its 2025 financial guidance. Free cash flow came in at $16.6 billion, toward the high end of its guidance range. Adjusted earnings per share (EPS) grew nearly 9% for the full year to $2.12, beating expectations.More importantly, AT&T sees that momentum continuing.For 2026, AT&T is guiding for free cash flow of $18 billion-plus. A healthy, growing free cash flow is what keeps a dividend stock’s payout safe and credible.Notably, AT&T plans to return more than $45 billion to shareholders over the next three years through dividends and share buybacks combined. That works out to over 20% of its current market cap.”Over time, we expect that our improved growth, declining capital intensity, and higher free cash flow will provide us with even greater flexibility to support enhanced shareholder returns,” Stankey stated.

AT&T is focusing on share buybacks and dividends.Bill Pugliano/ Getty Images

On the operational side, AT&T is in the middle of a meaningful growth push. It added more than one million fiber customers for the eighth straight year in 2025. Its fiber footprint stood at 32 million locations at the end of last year. The company expects that number to climb past 40 million by year-end 2026, partly thanks to its recently closed acquisition of Lumen Technologies’ fiber assets.AT&T CFO Pascal Desroches confirmed at a March 2026 conference that the Lumen deal closed in early February, adding over four million fiber passings and around one million subscribers. That’s a significant footprint expansion for a company that is deliberately positioning fiber and wireless together as a convergence play.Where that strategy is working, the numbers are compelling. AT&T’s fiber convergence rate, or the share of fiber customers who also access its wireless service, hit 42% in the fourth quarter of 2025, up 2% year over year. Stankey noted that in areas where AT&T offers both fiber and wireless, its postpaid phone market share is 10 percentage points higher than in areas where it doesn’t offer fiber.Is AT&T a dividend stock you should own?No dividend stock is risk-free, and AT&T carries real challenges. The company took on additional debt to fund its Lumen and EchoStar spectrum acquisitions, pushing its net leverage to roughly 3.2x adjusted EBITDA (before interest, taxes, depreciation, and amortization) following the closing of those deals. Related: AT&T rolls out major upgrade for customers, challenging T-MobileManagement expects to bring that back down to the 2.5x target range within about three years.The legacy copper network is also a drag though the company is actively working to eliminate the same by 2029.Investors should note that AT&T was forced to cut its annual dividend from $2.08 per share in 2022, due to rising interest expenses and an unsustainable payout ratio.Still, for income investors who want a dividend stock with clear free cash flow visibility, a defined capital return plan, and a growing core business, AT&T makes a legitimate case. The $1.11 annual dividend is backed by $18 billion-plus in expected free cash flow and a coverage ratio that leaves plenty of room.If your goal is $1,000 a year in passive income, you’d need roughly 901 shares, or about $26,120 invested at today’s prices.Related: How much to invest in Ford stock for $1,000 in 2026 dividends

TheStreet aims to feature only the best products and services. If you buy something via one of our links, we may earn a commission.Why we love this dealThe way you use your space can change how you live. Taking advantage of every part of your home, whether it’s for storage, hanging out with friends, or enjoying your coffee every morning, can help make your day more enjoyable. Creating a cozy breakfast nook in your kitchen can offer a place to sit down for breakfast, enjoy a meal with the family, or even double as a workspace. In smaller homes and apartments, this can help create a different area to spend time in, instead of eating, working, and relaxing on the sofa. If you are looking to add some extra seating to your entertainment area, want a flexible but chic breakfast nook, or want something that’s light enough to be carried to the patio or used in the kitchen, the Lttromat 3-Piece Bistro Bar Set is a versatile and simple option. Plus, it’s just $110 for the whole set! Shoppers can save $37 at Walmart.Lttromat 3-Piece Bistro Bar Set, $110 (was $147) at Walmart

Courtesy of Walmart

Shop at WalmartWhy do shoppers love it?This bistro set features a round pub table and two bar stools that are perfect for Saturday morning breakfast or Monday night studying. The frames bring a sleek, modern feel, and you can choose between a rustic brown table top color or white marbling, both offering great discounts. The frames are made of sturdy metal material, and the table top is made of a premium medium-density fiberboard material, offering a lightweight but sturdy option. The chairs are light enough to use in other parts of the house when having guests over, but each one can hold up to 250 pounds. Each chair also features circular bars that provide frame stability, but can double as a footrest.Related: Amazon is selling an ‘elegant’ 3-piece patio set for $100 that has washable cushions and adjustable feetThe table top measures 23.6 inches in diameter, while the barstools each measure 35.23 inches tall, with a 13.77-inch deep seating area and a 13.1-inch-by-6.3-inch backrest. This size is great for two people to have breakfast, or to spread out study or work material. The feet feature adjustable, non-slip pads that prevent wobbling on uneven surfaces, and the table top surface is super easy to clean with a damp rag if crumbs or other spills occur. The setup is quick and easy, taking only a few minutes with the included items. The round size option is the best deal, but they also have a small square-top option and a larger rectangle-top option for a bit more. Shoppers can also choose from white or Rustic Brown table top colors.The pros and cons of this bistro setProsMaterial: The table top is easy to clean, and the table and chair frames are made of sturdy metal with feet that prevent slipping and wobbling.High weight capacity: Each chair has a weight capacity of 250 pounds.The set is easy to move around: This set can be used as extra seating when having company over, or can be used on the patio during a nice day.Cons The tall bar-stool design isn’t for everyone: This may not be the right set if you find lower chairs to be more comfortable.Color options: With only two color options, they might not match your home decor. One reviewer said, “We bought this to go in our kitchen, and my husband and I have really enjoyed this purchase. I put it together with no problem. It’s sturdy and a wonderful edition.” Another person said it’s “perfect for a small patio or porch area.”Shop more dealsCvortll 3-Piece Table Set $99 (was $120) at WalmartSegmart 5-Piece Table Set, $149 (was $290) at WalmartCostway 3-Piece Table Set, $94 (was $159) at WalmartThe Lttromat 3-Piece Bistro Bar Set works in smaller areas or as an extra addition to any sitting area. It’s easy to put together and holds a good amount of weight. It works well as both a breakfast nook or study area, or you can bring it out to the patio during nice spring days. Walmart has it for just $110 for the round white option, saving shoppers $37.