Telstra (TLS) is a core holding for many retail investors. Being the dominant telecommunication carrier in Australia the earnings are consistent and can be estimated with a higher degree of certainty verses resource or energy companies like Woodside.
In the Australia Telecom sector, Telstra is the elephant in the room. The downside of once dominating the industry is the limited growth opportunities. Most of the current income is returned to shareholders which can be attractive for income focused investors. Challenger providers like TPG Telecom are aiming to take market share from TLS by being more nimbler in product development and more competitive pricing.
The most recent results from the company shows the potential struggle transitioning from traditional dominant telecom provider under copper and cable to a NBN retailer. The business has to run alot harder to standstill and replace the earnings lost. While it has received a large one time payment and 25 years of government annuity. The reinvestment of the payoff is not without its risks.
Telstra Dividend History
Chart below show the last 11 years of TLS dividend history and the dividend yield (ex-dividend price adjusted for the dividend).
Highlights from the chart above by comparing the Telstra dividend history with the dividend yield overtime:
1. Total amount of dividend paid rose from period of privatisation in 2000 to 2004 and has remained largely at this level. 2005 and 2006 included 6.00 cents of special dividends over 3 payment periods.
Since 2006 it has largely remained at 14 cents every 6 months.
2. The dividend yield, which is the ex-dividend date price plus the dividend paid peaked in 2010. Investors buying Telstra then would have received almost 9% based on purchase price.
While Telstra share price is not shown in the chart, the decline in the half annual yield from 2010 to 2015 reflect the run up in the share price of Telstra since then.
3. Only in 2H 2013 has the amount paid every 6 months rose and it has been steadily increased since then to 15.50 cents in 2H 2015.
4. On average the Telstra dividend yield over the sample period is around 3.60% on half annual basis. Current Telstra yield is at the lower end of the historic yield range for the share. This largely reflect the low interest rate environment where there are limited income opportunities for investors.
5. The chart does not include the dividend franking credit that is included in the dividend. The dividends are usually fully franked at 30% corporate tax rate. The inclusion of the value of franking credit increases makes the return on investment higher for Australian investors on an after tax basis.
Key Telstra Dividend Dates 2017
Interim Ex-Dividend Date: 1st of March
Interim Record Date: 20 of March
Interim Dividend Payment Date: 31 March
Final Ex-Dividend Date: 30th August
Final Record Date: 31th August
Final Dividend Payment Date: 28th September