Morgan Stanley Expects 3% Dividend Increase on AT&T

Morgan Stanley has published a research report on AT&T (NYSE: T) and expects the company to raise its dividend by 3% over the next few days.In the report, Morgan Stanley writes, "We expect AT&T to raise its dividend by 5 cents or 3% (in-line with consensus) over the next few days, as it has done annually for the past 27 years. This, along with Verizon's 2.6% dividend increase back in September, highlights the sustainability of the two highest dividend yields in the Dow 30. In the last two years, both 4-cent increases (2.4%) came on the third Friday of December, while 2009's 4-cent increase (2.5%) came on the second Friday, pointing to either aDecember 9 or 16 decision this year. Our estimated raise puts the dividend at $1.77/year implying a 71% and 72% payout on 2012 consensus EPS and FCF."Morgan Stanley currently has no rating or price target on AT&T, which closed yesterday at $28.84.