History says that September might be the best time to buy these ultra-high-yielding dividend stocks

The stock market has been on a roll for over a year and a half. benchmark S&P 500 the index is up about 48% since the end of 2022.

Economic recoveries tend to last much longer than recessions, but savvy investors know that the next bear market could be right around the corner.

The next few weeks could be a particularly good time to buy a reliable dividend payer. September tends to be a bad month for the stock market and this year could be worse than usual. July and August were both positive months for the major market indices, so traders returning to the office after the summer break are sitting on a pile of unrealized profits they could take off the table.

With markets behaving unpredictably, it makes sense to fill your portfolio with reliable, dividend-paying stocks. At recent prices, AT&T (T 1.55%) it offers a 5.4% return that you can keep even if the ongoing bull run fizzles out. Here’s why taking it out in September might be a smart thing to do.

Broadband is back

The telecom industry isn’t the most exciting corner of the economy, but investors looking for income can be excited by the reliable cash flows that telecom providers generate. After all, when was the last time you changed your mobile internet or broadband provider?

For years, AT&T has been losing traditional cable Internet subscribers. However, late last year it launched a fixed wireless solution that leverages its 5G infrastructure. Now the total number of broadband subscriptions is increasing again.

AT&T Internet Air added 139,000 new subscribers in the second quarter, and AT&T Fiber added 239,000. The combination increased total broadband revenue in the second quarter by 7% year-over-year.

Broadband is not the only segment that is steadily growing. Second-quarter wireless revenue rose 3.4% year-over-year, driven by an industry-leading churn rate.

Don’t be put off by the recent lack of dividend growth

AT&T cut its dividend payout in 2022 to adjust for the sale of its unpredictable media assets and to pay down huge debt. Investors can look forward to annual dividend increases starting again, likely in 2025.

Over the past 12 months, AT&T’s highly profitable operation generated $21 billion in free cash flow. The company only needed 39% of that amount to meet its dividend commitment, so there’s plenty of money left over to reduce debt.

The company ended the second quarter with net debt of $127 billion, which was 2.87 times adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). Management says it is on track to reduce its net debt to adjusted EBITDA ratio to 2.5 in the first half of next year. There were no specific promises, but the company will likely start raising its dividend payout again once it hits that target.

In addition to a growing top line and lower interest expense, AT&T investors could benefit from more stable capital investment now that its 5G rollout is largely complete. The company plans to spend between $21 billion and $22 billion this year on capital expenditures, which would be a significant improvement over the $23.6 billion it spent last year.

Get ready to buy the dips

Despite the stock price rising 23% this year, AT&T’s dividend still offers a yield that’s more than four times the average stock in the S&P 500. It’s also more than double the average dividend yield from the actions of Dow Jones Industrial Average.

AT&T stock is tempting right now, but you could get an even better return if it goes down in September. Adding these stocks to your shopping list and waiting for a pullback could lead to plenty of dividend income down the road.