Telstra's Upcoming Dividend: A Sweet Reward for Shareholders

Telstra Group (ASX:TLS) has been on a roll lately, with its share price rebounding from a low of $3.39 in May to $3.86 in July. The company's strong mobile business performance, cost reduction efforts, and improved underlying profits have all contributed to this positive momentum. Now, Telstra is set to reward its shareholders with a larger dividend than last year's. Let's dive into the details and explore what this means for investors.

Telstra's interim dividend for FY24 is expected to be paid on 28 March, with an ex-dividend date of 28 February. The company has announced a dividend per share (DPS) of 18 cents, up 5.9% year-over-year. This increase reflects Telstra's strong financial performance and commitment to returning capital to shareholders. The fully-franked dividend yield of 4.7% based on S&P Capital IQ's FY25 EPS estimate is also attractive to investors.

The increase in Telstra's dividend aligns with the company's overall financial performance and strategy. Telstra's underlying profits are largely in line with expectations, with total income increasing by 1% to $23.5 billion and underlying EBITDA increasing by 3.6% to $8.2 billion. The company's mobile division delivered a 9.2% growth in underlying EBITDA to $424 million, contributing to the company's overall growth. Telstra's improved return on invested capital (ROIC) of 8.3% from 8.1% a year ago also indicates improved operational efficiency.

Telstra's cost reduction efforts have also played a significant role in the company's improved financial performance. The company has saved operational costs of $122 million over the last two financial years and has announced proposals to simplify its operations and increase productivity. These measures, along with the existing actions, are forecast to reduce $350 million of fixed core costs over FY23-25.



The increased dividend is expected to have a positive impact on Telstra's share price and investor sentiment. The Telstra share price is valued at a price-to-earnings ratio (P/E) of 20x based on S&P Capital IQ's FY25 EPS estimate, which is about the midpoint of its historical trading range of between 10x and 30x. This indicates that Telstra's share price is relatively undervalued compared to its historical average, and the increased dividend yield may attract more investors, further boosting the share price.

In conclusion, Telstra Group's (ASX:TLS) upcoming dividend will be larger than last year's, reflecting the company's strong financial performance and commitment to returning capital to shareholders. The increased dividend aligns with Telstra's overall financial performance and strategy, and is expected to have a positive impact on the company's share price and investor sentiment. As a Telstra shareholder, you can look forward to enjoying a sweet reward for your investment in the company.