A hefty dividend cannot hide AT&T's big problem -- the failure to create any Economic Value Added (EVA) for its capital holders.

Economists and financial professionals are using EVA or economic profit to measure how effectively corporations invest other people's money -- the money of stockholders and debt holders.

EVA is usually measured as the difference between Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC).

A positive EVA over a substantial period indicates that the management of these companies creates value for their stakeholders above the capital markets, while a negative EVA suggests that management destroys value—capital holders should look for better opportunities in other companies.

According to Guru Focus, AT&T barely created any value for its capital holders.

In 2021, AT&T's ROIC was 4.46%, while its WACC was 4%. Thus, its EVA is 0.46%, far below the 7.14% dividend the company is paying out. In essence, management returns capital rather than value to its stockholders.

AT&T's low EVA is a poor exploration of low-return business opportunities (e.g., unsuccessful acquisitions) and high leverage, which raises the cost of capital. For instance, AT&T's long-term debt of $162 billion is 1.5 times higher than its market capitalization.

Wall Street has noticed. Over the last five years, AT&T has lost close to 37% of its value as the overall market gained 44%, and its close competitor T-Mobile gained 124%.

And, unless it finds new high-profit business opportunities, EVA could turn negative in a rising capital cost environment.

Nonetheless, management remains optimistic that things will turn around, as it continues to invest in 5G.

"We're investing at record levels to enhance our 5G and fiber connectivity and to deliver the best experience available in the market," AT&T CEO John Stankey said in a third-quarter earnings report. "Our results show our strategy is resonating with customers as we continue to see robust levels of postpaid phone net adds and approach 1 million AT&T Fiber net adds for the year."

But Raj Shah, a managing partner at digital consulting company Publicis Sapient, is skeptical about the direction of the company.

"AT&T's strategy of focusing on just the access layer only feeds the loop telcos have been desperate to break free from," Shah told International Business Times in an email. "While envious of tech company valuations, telcos act like utilities and get valued like utilities. A single-minded pursuit of being great at one thing gives a focus to AT&T that it has lacked, but is not a strategy for long-term growth."