The dividend stock that just keeps on giving – that's Telstra Corporation Ltd (ASX: TLS).
In good news for investors, Telstra has today announced that it has increased its final dividend to 15.5 cents, up from 15 cents last financial year. Ok, it may be a small increase, but it does mean that the giant telco is paying a 5% fully franked dividend yield at today's share price of around $6.24.
Grossed up to include those lovely franking credits means a pre-tax yield of 7.2%. You don't need much capital growth on top of that to beat the market each year. Investors won't get much growth either – Telstra is forecasting 'low-single digit growth' in earnings before interest, tax, depreciation and amortisation (EBITDA) and 'mid-single digit growth' in revenues.
Here are a few more highlights from the company's full year results:
- Earnings per share at 34.5 cents, up slightly over the previous year
- Re-activation of the Dividend Reinvestment Plan (DRP), allowing shareholders to take their dividends in shares instead of cash.
- 664,000 new retail customer services added. Telstra now has 16.7 million mobile customers.
- Net 189,000 retail fixed broadband customers added
- Mobile revenues grew by close to $1 billion, up 10.2% over the previous year
- Network Applications and Services (NAS) and International also posted strong growth of 23% and 44% respectively
- One downside was the 12.7% fall in earnings before interest and tax for Foxtel, which is 50% owned by Telstra. That was despite 8.6% growth in the number of subscribers. We've highlighted previously that Foxtel's premium services are being impacted by the arrival of Netflix.
- Autohome, the Chinese equivalent of Carsales.com.au, continues to report strong growth with 79% increase in revenues in 2015. Telstra now owns 54.3% of the NASDAQ-listed company.
- A host of smaller acquisitions is expanding the services that Telstra can provide, including digital health. They are also filling in gaps in the company's services.
Foolish takeaway
All up a solid result from Telstra. Ignore the 1.4% fall in the share price – this is all about a rock-solid and growing, fully franked dividend yield of more than 5%.
