S&P/ASX 200 Index (ASX: XJO) dividend shares are back in vogue as rising interest rates put the brake on the rapid share price growth investors enjoyed in recent years.
But if you're on the hunt for dividends from your ASX portfolio you need to do more than simply look at what the companies paid out over the past year.
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Investors need to gauge future earnings
Those quoted yields you see on company pages are trailing yields. In other words, backwards looking. And while some ASX 200 dividend shares that offered high yields in FY22 may do so again in FY23, others may not be able to do so.
While gauging future earnings inevitably comes with uncertainties about what the future holds, some research into potential revenue growth, including asset sales, can help investors avoid so-called dividend traps.
With that in mind, we look to one ASX 200 dividend share that Michael Maughan, head of the Tyndall Australian Share Income Fund, believes will deliver "material returns to shareholders" in the year ahead.
ASX 200 dividend share with assets to sell
Asked by Livewire which ASX 200 dividend shares he believes will continue to pay out sustainable yields in the future – from a list that included the big banks and iron ore giants – Maughan singled out Telstra Corporation Ltd (ASX: TLS).
"The banks are in a period where they do have a positive tailwind," Maughan said. Adding that, "The more exciting part of that group is Telstra."
According to Maughan:
It's had a change in the short term to its core business and it's returned to growth. The mobile business is growing and the headwinds from the NBN are behind it. And over the medium term, it's probably one of the few companies we expect will have capital management and material returns to shareholders from asset sales.
Maughan pointed out that Telstra's recent sale of its Towers business resulted in a billion dollar plus share buyback. And he thinks there's more to come:
This is because Telstra has fixed infrastructure assets it's looking to sell. If you go back to when they sold their Towers business, that was a return of over a billion dollars to shareholders. And the fixed assets are more than five times the size of that.
Following Telstra's half year report in February, the board of the ASX 200 dividend share declared a fully franked interim dividend of 8 cents per share, with a 6 cent ordinary dividend and a 2 cent special dividend. This saw some $940 million returned to shareholders.
Telstra reports its full financial year results this Thursday, 11 August.
