Is the Telstra dividend the best on the ASX?

The Telstra Corporation Ltd (ASX: TLS) dividend has been a staple of ASX share portfolios for decades – is it still the best on the market?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Telstra Corporation Ltd (ASX: TLS) dividend has been a staple of Aussie share portfolios for decades. Telstra has been known as a top income-earning stock since listing on the ASX back in 1997.

So, despite some recent troubles, is Telstra still considered a blue-chip dividend stock in 2019?

The Telstra dividend history

Telstra has long had a policy of paying out close to 100% of its underlying profit to shareholders. As recently as 2016, Telstra was paying out a tidy 31 to 32 cents per share to its investors.

Telstra CEO Andy Penn changed that policy to a target range of 70–90% of underlying profit back in 2017.

These cuts came as Telstra was struggling in the face of increased competition from NBN Co. and the rollout of the National Broadband Network.

Telstra shares are currently yielding 2.81% after slashing its shareholder payout by 27% to 16 cents per share.

A disappointing FY19 full-year result saw profit plunge 40% and Telstra announce further dividend cuts. This included a $600 million drag on earnings from the NBN as the company continues to cut costs.

Are there positives for Telstra?

I think the Telstra share price could be a good value buy at its current level.

Telstra shares have climbed 28.52% since the start of January to outperform the S&P/ASX 200 Index (INDEXASX: XJO).

The biggest driver for the Telstra share price going forward should be its potential 5G network dominance.

With TPG Telecom Ltd (ASX: TPM) pulling out of the 5G race earlier this year, it could pave the way for a new era of Telstra dominance.

If Telstra can capitalise on the 5G network and put the NBN earnings hit behind it, this could spark a Telstra dividend recovery.

Foolish takeaway

The Telstra dividend has been a bedrock of many ASX portfolios for decades.

While I think Telstra shares could rebound in 2020, other good ASX dividend options include Alumina Ltd (ASX: AWC) and Westpac Banking Corp (ASX: WBC).

Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Technology Shares

Businessman working and using Digital Tablet new business project finance investment at coffee cafe.
Technology Shares

Why are investors fighting to buy this speculative ASX stock today?

What is getting investors excited today? Let's find out.

Read more »

Two men laughing while bouncing on bouncy balls
Technology Shares

Top broker says ASX 300 tech stock has 18% upside after sell-off

ASX 300 investors overreacted in punishing the high flying tech stock yesterday, this top broker says.

Read more »

A young woman holds her hand to her mouth in surprise as she reads something on her laptop.
Earnings Results

Xero share price rockets to record high on explosive half-year growth

The tech star delivered another impressive half year results this morning.

Read more »

A young man goes over his finances and investment portfolio at home.
Technology Shares

These ASX 200 tech stocks just crashed! Is this a no-brainer buying opportunity?

Bell Potter thinks these tech stocks could be great options following declines this week.

Read more »

Modern accountant woman in a light business suit in modern green office with documents and laptop.
Technology Shares

Down 45% in 8 months, why this ASX 200 tech stock 'now looks attractive'

Down 45% since March, this investing expert sees good value in the ASX 200 tech stock.

Read more »

A man in a suit face palms at the downturn happening with shares today.
Technology Shares

Why is this ASX tech stock crashing 27% today?

Why are investors hitting the sell button? Let's find out.

Read more »

Man looks confused as he works at his laptop. watching the Magnis share price movements
Technology Shares

WiseTech share price in spotlight again as class action mounts

The headlines continue rolling in.

Read more »

Unsure man analysing data on laptop.
Earnings Results

ASX 200 tech stock sees red as investors punish Q3 results

Investors continue digesting the numbers.

Read more »