NEW YORK, FEB. 29 -- American Telephone & Telegraph Co. Chairman James E. Olson today indicated that the ratio of the telecommunications giant's annual $1.20-a-share dividend to the $1.88 a share it earned in 1987 is too high.

The company did not say that it plans to cut its dividend, and one analyst said such a move is unlikely.

AT&T has paid a $1.20 dividend every year since its 1984 divestiture of local telephone companies. Last year's dividend payout was 64 percent of earnings per share.

Olson made his statement in a question-and-answer segment of the company's 1987 annual report, mailed to shareholders today.

In the report, Olson was asked whether an increase in the dividend is likely. He responded that, while future improvements in earnings could spur dividend hikes, the rate is currently too high, compared with the company's earnings.

"We're paying out too high a percentage of our earnings in the form of dividends," Olson said, adding that the company's objective is to produce higher earnings.

Bob Wilkes, a telecommunications industry analyst for Brown Brothers Harriman & Co., said it is unlikely AT&T would attempt to cut its dividend.

"I think the company will handle the problem by raising its dividend more slowly than its earnings go up," he said.

When AT&T declared its $1.20 dividend in 1980, it forecast annual net income of about $2 a share, Wilkes said.

AT&T has not achieved that level so far because its equipment sales division, which sells phone switchboard systems, computers and other office products, has not been as profitable as projected.

"A strong improvement of the equipment sales division's performance over the next few years will be critical for the health of the company," Wilkes said.

He added that the seven regional companies that splintered off from AT&T following the company's 1984 breakup also pay dividends averaging 65 percent of their annual per share net income.

However, Wilkes said AT&T does not generally measure its performance against that of regional companies Ameritech Corp., Pacific Telephone Co., Bell Atlantic Corp. Nynex Corp., Southwestern Bell, BellSouth Corp, and U.S. West Co.

"There really is no other company to directly compare to AT&T," he said.

AT&T, whose stock is the most widely held in the United States, said it printed 3.6 million copies of the 1987 annual report to send to stockholders and members of the press, including 10,000 copies for Japanese shareholders.

It is also producing 700 "talking" annual reports on cassette tapes for its sight-impaired shareholders.