The Telstra Corporation Ltd (ASX: TLS) share price has declined another 3.5% today. The TLS share price is now fetching $4.65, although it did hit a low of $4.62 earlier, which is the lowest the shares have traded for since 2013.
Today's decline can be attributed to the shares now trading without entitlements to the group's interim 15.5 cents per share fully franked dividend. While the dividend itself will be paid on 31 March, only shareholders who owned the shares leading into today are entitled to receive it.
Shares of businesses are expected to trade lower when they go ex-dividend. This is because dividend payments, by nature, will reduce the amount of equity held by the business. Thus, today's share price decline isn't out of the ordinary.
However, shareholders of Australia's largest telco do have a number of concerns they need to contend with, including rising levels of competition from the likes of Optus in mobile, and TPG Telecom Ltd (ASX: TPM) in broadband.
Indeed, Telstra reported a 6.4% decline in revenue for the first half, compared to the prior corresponding period, while its profit declined 14.4%. In fact, its profit was $1.79 billion for the period – slightly below the amount it will pay out to shareholders in the form of its dividend.
Telstra's shares have fallen sharply since they traded as high as $5.86 in July last year, and currently offer a fully franked dividend yield of 6.7%.
That's a solid yield, but investors will need to watch closely to ensure the underlying business remains intact. Any further declines in its earnings or revenue are certainly something to watch out for.
