The Best Dividend Stocks to Buy in 2025: AT&T and Kinder Morgan Lead the Pack
AInvestSaturday, Jan 4, 2025 11:42 am ET
3min read
KMI --


As we approach 2025, investors are looking for stable, high-yielding dividend stocks to add to their portfolios. Two companies that stand out in this regard are AT&T (T) and Kinder Morgan (KMI). Both companies offer attractive dividend yields, strong financial performance, and promising growth prospects.



AT&T: A Telecommunications Titan with a Steady Dividend

AT&T is a telecommunications giant that offers both wireless and broadband services to its customers. The company is expanding its fiber internet network, aiming to reach over 50 million locations by 2029. This expansion, combined with its growing 5G wireless subscriber base, is expected to generate over $18 billion in annual free cash flow by 2027. Management is committed to passing much of this cash on to investors through dividends and stock buybacks, totaling over $40 billion over the next three years.

AT&T's shares are currently trading at around 10 times its forecasted free cash flow for 2025, with a stock yield of 4.9%. This high yield, combined with the company's strong free cash flow growth prospects, suggests that AT&T's dividend is likely to be sustainable and even grow in the coming years.



Kinder Morgan: An Energy Infrastructure Giant with a Growing Dividend

Kinder Morgan is an energy infrastructure giant that owns and operates nearly 80,000 miles of pipelines, transporting crude oil, natural gas, and other fuels across the United States. The company has a particularly strong presence in the natural gas market, where its pipelines transport roughly 40% of the gas produced in the country.

Multiple trends are boosting demand for natural gas, including increased U.S. liquefied natural gas (LNG) exports, the reshoring trend, and the AI revolution. These trends should enable Kinder Morgan to continue increasing its dividend in the coming years. CEO Kim Dang expects the energy leader to raise its cash payout for the eighth consecutive year in 2025 to $1.17 per share, amounting to a greater than 4% dividend yield for investors who buy shares today.

Conclusion: AT&T and Kinder Morgan Offer Attractive Dividend Opportunities in 2025

Both AT&T and Kinder Morgan offer attractive dividend yields, strong financial performance, and promising growth prospects. Investors looking for stable, high-yielding dividend stocks in 2025 should consider adding these two companies to their portfolios. However, it is essential to monitor the companies' financial performance and dividend payout ratios to ensure that they remain within sustainable levels. If the companies' free cash flow growth slows down or their dividend payout ratios become too high, it could put the sustainability of their dividends at risk. By staying informed and making well-researched investment decisions, investors can benefit from the attractive dividend opportunities offered by AT&T and Kinder Morgan in 2025.
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