Down more than 13% so far in 2021, AT&T (NYSE:T) stock is having a disappointing year. And it’s soon to lose its revered status as a dividend aristocrat.

Investors reacted poorly to the company’s plan to unload its WarnerMedia assets to Discovery (NASDAQ:DISCA) for $43 billion. The deal was announced just three years after AT&T bought Time Warner for a whopping $102 billion.

Talk about a bad return on investment!

While AT&T shareholders will end up with a 71% stake in Discovery, the company is also losing substantial assets in Warner Bros., 24-hour news channel CNN and streaming service HBO.

Not only that, the deal prompted AT&T to cut its annual dividend – a dividend that for many investors was the best reason to hold T stock in the first place.

Even now, analyst sentiment on AT&T stock is split. There’s a school of thought that T stock is near its bottom. But other analysts believe the recovery will be slow to develop.

AT&T Stock Earnings

Third-quarter earnings were a mixed bag for T stock. The company reported revenue of $39.9 billion, which missed analysts’ estimates of $41.2 billion and represented a 5.7% decline from a year ago. Adjusted earnings per share came in at 87 cents, however, which beat analysts’ predictions in 79 cents per share and was 14.5% better than the same quarter a year ago.

AT& said that it added 928,000 postpaid phone subscribers during the third quarter, which also beat analysts’ expectations of 521,100 new subscribers.

CEO John Stankey lauded the results.

We continue to execute well in growing customer relationships, and we’re on track to meet our guidance for the year. We had our best postpaid phone net add quarter in more than 10 years, our fiber broadband net adds increased sequentially, and HBO Max global subscribers neared 70 million.

The Dividend Picture

AT&T currently offers a whopping dividend of 8.3%, but that’s not going to last.

When it announced the Discovery/WarnerMedia deal in May, AT&T said that the company expects an annual dividend payout ratio of 40% to 43%, with expected free cash flow of $20 billion or more. And in mid-September, AT&T projected 2023 dividends of $8 billion to $9 billion.

That sounds great. But when you look at what AT&T currently pays out, you’ll see it’s a big decrease. The payout ratio for T stock today is a hefty 65%. In 2020, the payout ratio for AT&T stock was 55%, and the company distributed $15 billion in dividends.

According to Seeking Alpha, analysts believe that T stock will lower its dividend by 5% for fiscal 2022, from $2.08 to $1.97. And they project the dividend will drop by another 7% in 2023, to $1.84.

Sure, AT&T will still have a dividend. But it won’t be nearly as generous as it is today. And that will make T stock a lot less appealing.

Analyst Sentiment Is Mixed

If you’re looking for clarity from Wall Street analysts on T stock, you’re going to be a little disappointed.

Jonathan Kees, an analyst at Daiwa, recently initiated T stock coverage with a price target of $26 and a “neutral” rating. He wrote that AT&T “faces many headwinds” despite trading at a three-year low.

He also noted that the company has substantial spending ahead of its as it rolls out its 5G network. And it has a debt ratio of 4.4x, even after the Discovery/WarnerMedia deal goes through.

Meanwhile, Barclays analyst Kannan Venkateshwar upgraded his company’s rating of T stock from “equal weight” to “overweight.” He kept the price target at $30 for T stock. Venkateshwar wrote that AT&T “could be closer to a floor” than Discovery.

The Bottom Line

Either way you look at it, T stock is flawed these days. The 2018 deal to buy Time Warner was an unmitigated disaster and it’s going to take some time to recover.

It’s not every day that you see a stock fall off the dividend aristocrat list, but that’s what will happen to AT&T. After increasing its dividend for 35 consecutive years, T stock will cut its dividend over the next two years.

AT&T stock is facing an uncertain future. But one thing’s for sure – its days as a dividend stalwart are nearly at an end.

On the date of publication, Patrick Sanders did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Patrick Sanders is a freelance writer and editor in Maryland, and from 2015 to 2019 was head of the investment advice section at U.S. News & World Report. Follow him on Twitter at @1patricksanders.