How big will the Telstra dividend yield be in FY23?

Is this telco going to be a major dividend payer in the new financial year?

| More on:
A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer

Image source: Getty Images

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

Key points

  • Telstra has just entered the 2023 financial year
  • It’s expected to pay an annual dividend of 16 cents per share in FY22 and FY23
  • However, there is potential for dividend growth in FY24, according to one estimate

The Telstra Corporation Ltd (ASX: TLS) share price is an interesting consideration as an ASX dividend share at its current level.

Telstra is the largest telecommunications business in Australia, with a strong presence in both mobile and home broadband. It also has exposure to a number of other telco areas with Telstra Health, as well as a presence in the Asia Pacific region with its Digicel Pacific acquisition.

The company has been committed to paying investors a high level of dividend income for an extended period of time.

Even if the dividend has been variable over the last couple of decades, it has remained at a high dividend payout ratio. In other words, even though Telstra's dividends and net profit after tax (NPAT) have changed over the years, it has consistently paid out a relatively high proportion of its profit to shareholders.

Since 2019, Telstra has paid shareholders a half-yearly dividend of eight cents per share every six months.

It seems that Telstra is on track to pay another eight cent per share dividend for the second half of FY22.

How big will the Telstra dividend be in FY23?

Dividends are not guaranteed. Even if the telco has provided comments or guidance about its future dividend, it's still not 100% certain.

Having said that, let's look at what Telstra has said regarding its upcoming dividends.

As part of its T25 strategy, the telco outlined its ambition to increase its underlying return on invested capital to around 8% by FY23. It's also targeting a compound annual growth rate (CAGR) of mid-single digits for underlying earnings before interest, tax, depreciation and amortisation (EBITDA) and high-teens for earnings per share (EPS) between FY21 to FY25.

Telstra said:

Through delivery on its T25 commitments, Telstra is confident in maintaining a minimum 16 cent per share fully franked dividend, subject to no unexpected material events and the requirements of its capital management framework.

Based on an estimated 16 cents per share dividend, the current Telstra share price offers a potential grossed-up dividend yield of 5.9% in the 2023 financial year.

Is the dividend ever going to grow again?

Telstra said that by implementing its T25 strategy, it will become a "vastly different company". Delivering profit growth will certainly help as it seeks to grow its dividends "over time".

However, it acknowledged that it needs to grow underlying earnings in line with its financial ambitions, and grow its franking balance in a bid to grow its fully franked dividends.

It intends to grow profit by extending its 5G coverage, cutting costs, earning a higher margin through wireless home broadband, and increasing its mobile prices in line with inflation.

Looking at estimates on CMC Markets, the FY24 dividend forecast is 17.7 cents, implying a 10.6% increase in the dividend. That higher dividend translates into a forward grossed-up dividend yield of 6.5%.

Should you invest $1,000 in Csr right now?

Before you buy Csr shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Csr wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Communication Shares

Young woman thinking with laptop open.
Communication Shares

How an end of the Trump tariffs could sink Telstra shares

A leading expert foresees trouble for Telstra shares amid Trump’s tariff retreat.

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
Communication Shares

Telstra share price dips amid BIG leadership news

Telstra released a major leadership announcement on Monday.

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
Communication Shares

Why are News Corp shares trading 4% higher today?

Investors respond to News Corp’s quarterly results announcement.

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Communication Shares

Why this expert is calling time on Telstra shares

A leading expert forecasts tougher times ahead for Telstra shares. Let’s find out why.

Read more »

man looks at phone while disappointed
Communication Shares

$10,000 invested in Telstra shares at Christmas is now worth

Should you have put $10,000 into the telco giant before the Christmas break? Let's find out.

Read more »

A woman sits on sofa pondering a question.
Broker Notes

Battle of the online classifieds: Should I buy Car Group or Seek shares?

Brokers rate both shares highly.

Read more »

A woman standing in a blue shirt smiles as she uses her mobile phone.
Communication Shares

Telstra is rewarding its shares investors today

Here's how.

Read more »

A couple makes silly chip moustache faces and take a selfie on their phone.
Communication Shares

$10,000 invested in Telstra shares 5 years ago is now worth…

Buying Telstra shares in March 2020 would have delivered some term-deposit-busting returns.

Read more »