It certainly has been a great year for the Telstra Corporation Ltd (ASX: TLS) share price.
Year to date, the telco giant's shares have risen a sizeable 28%.
This is more than double the return of the S&P/ASX 200 Index (ASX: XJO) over the same period.
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Why is the Telstra share price up 28% in 2021?
The key driver of the Telstra share price this year has been its improving operational performance.
This ultimately led to the company releasing a solid full year result last month. For example, for the 12 months ended 30 June, Telstra reported an 11.6% decline in total income to $23.1 billion and a 9.7% decline in underlying EBITDA to $6.7 billion.
While a decline may not seem like something to get excited about, it was in line with the company's guidance. Telstra was guiding to underlying EBITDA of $6.6 billion to $6.9 billion in FY 2021.
This solid performance allowed the Telstra Board to maintain its fully franked 16 cents per share dividend.
Based on the current Telstra share price of $3.85, this represents a full franked 4.2% dividend yield.
Positive outlook
Arguably giving the Telstra share price the biggest boost, though, was management's outlook commentary.
After several years of declining sales and earnings, the rot is finally expected to stop in FY 2022.
Telstra's CEO, Andy Penn, commented: "2021 was a really significant year for Telstra. We delivered results in line with guidance and we are seeing the focus and discipline on T22 pay off. It represents a turning point in our financial trajectory. Our second half underlying EBITDA was up on the first half, and our guidance for FY22 underlying EBITDA is $7.0-7.3 billion, which represents mid to high single digit growth."
And better yet, further growth is being targeted in FY 2023.
Management said: "With our ongoing discipline on cost reductions, continued strong performance in our mobile business, and a diminishing financial impact from the rollout of the nbn, we have confidence in our outlook and we believe we are on the path to achieving our financial ambitions of $7.5 to $8.5 billion of underlying EBITDA and ROIC of around 8 per cent by FY23."
All in all, this is expected to allow the Telstra dividend to be maintained at 16 cents per share for the foreseeable future.
Is a dividend increase coming?
One leading broker not only believes the dividend cuts are over, but also suspects that an increase is on the way.
According to a recent note out of Goldman Sachs, it has pencilled in an 18 cents per share fully franked Telstra dividend in FY 2024.
Based on the current Telstra share price, this will mean a 4.7% dividend yield that year.
Goldman has a buy rating and $4.30 price target on the company's shares. This represents potential upside of almost 12% before dividends.
