Telstra (ASX: TLS) shareholders rejoice. Not only is the 28 cents per share annual dividend safe, it could rise, despite ongoing delays in the rollout of the NBN.
Telstra is set to receive billions of dollars in compensation for homes being taken off its copper network to be replaced by super-fast fibre, otherwise known as the NBN.
But with the NBN being way behind on its roll out targets, and the virtual certainty of a change in government later this year, the amount of the payout, and its timing, has led some investors to question whether Telstra dividend could be maintained, let alone lifted.
Fear not, dividend hungry investors…
Asked in The Australian Financial Review as to whether NBN delays could prevent a potential dividend rise, Telstra CEO David Thodey said: "The answer to that question is no".
Now before you rush to hit the "buy" button at your favourite online broker, know that 'potential' does not put dinner on the table.
If you are looking for certainty, go grab yourself a term deposit…paying all of 4%, if you're lucky.
Still, Deutsche Bank analyst Vikas Gour reckons Teltra will raise its dividend to 30 cents per share by 2014.
Telstra shares have soared 40% over the past 12 months, not including the fully franked dividend. Just goes to show how much of a bargain they were when we named them as our top ASX 20 stock back in August 2011.
With Telstra shares now trading around $4.50, and sporting a fully-franked dividend yield of 6.2%, they still look like a decent bet, regardless of the speed of progress on the NBN.
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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Motley Fool General Manager Bruce Jackson has an interest in Telstra.
