AT&T's fourth-quarter earnings beat Wall Street's estimates. A key metric for the wireless company also came in higher than expected.

For AT&T (ticker: T), the driver this earnings season is free cash flow. The company reported $14.1 billion in cash flow for 2022, a smidgen higher than management's prior guidance and the $13.8 billion estimate among analysts tracked by FactSet. AT&T set the 2023 forecast at $16 billion or more, matching estimates of $16.2 billion. Wall Street predictions for AT&T's this year's cash flow are down nearly 20% from mid-last year.

AT&T investors love the stocks' dividend payouts and the free cash flow that funds it. The company currently pays $1.11 in annual dividends per share or a 5.8% dividend yield based on Tuesday's closing prices—far above the S&P 500's dividend yield of 1.6%.

In February, the company cut its dividend by 47%, following the spinoff of WarnerMedia. Later, it lowered the outlook for 2022 free cash flow twice. Inflation as well as delays in collecting payments were the problem. The stock is down 4% over the past year, and missing an already lowered forecast would have further agitated investors.

The Dallas, Texas-headquartered company reported 61 cents in adjusted earnings on revenue of $31.3 billion for the fourth quarter, which ended in December. Analysts were looking for 57 cents on sales of $31.4 billion. Rival Verizon (VZ) matched earnings expectations on Tuesday — Barron's prefers T-Mobile (TMUS)

AT&T reported 1.104 million subscribers in total postpaid net adds in the fourth quarter, higher than estimates of 906 million. Its postpaid phone business added 656,000, slightly higher than the 644,800 expected.

The average revenue per user in the postpaid phone business, was up 2.5% from a year ago; it is likely benefiting from price increases carried out for older wireless plans last year as well as migration of users to those plans.

AT&T, much like in 2022, plans to pour $24 billion into capital expenditures this year as it builds out its 5G wireless and fiber networks. Analysts predicted $22.1 billion.

That shouldn't scare investors too much. AT&T's chief financial officer Pascal Desroches set up the expectation of peak investment in 2022 and 2023 several times last year. "Starting in 2024, we expect our capital investment to begin tapering to around the $20 billion," he said during an earnings call hosted in April last year.

To be sure, higher capital investment cuts into free cash flow and investors reward companies who save cash in the current weak economic environment, but AT&T's dividend for now "appears quite secure" while the "yield is still far in excess of average market rates," said Ben Reynolds, founder of research firm Sure Dividend.