Telstra share price higher on earnings beat and surprise dividend increase

Telstra's shares are having a strong day on Thursday. Here's why…

| More on:
A woman with strawberry blonde hair has a huge smile on her face and fist pumps the air having seen good news on her phone.

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

sdf

Key points

  • Telstra's shares are pushing higher on Thursday morning
  • This follows the release of a full year result which outperformed the market's expectations
  • A surprise dividend increase has also given its shares a boost

The Telstra Corporation Ltd (ASX: TLS) share price has been a solid performer on Thursday.

In morning trade, the telco giant's shares are up almost 2% to $4.08.

Why is the Telstra share price pushing higher?

Investors have been bidding the Telstra share price higher after the company's full year results impressed the market.

In case you missed it, the company reported a 4.7% year over year decline in revenue to $22,045 million but an 8.4% increase in underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to $7,256 million.

As a comparison, a note out of Goldman Sachs reveals that it was expecting underling EBITDA of $7.13 billion and the consensus estimate was $7.17 billion. The company has beaten both estimates, which helps explain why the Telstra share price is having such a good day.

Telstra's operating earnings growth was underpinned by an impressive performance from its mobile business. It reported EBITDA growth of 21.2% or $700 million thanks to the addition of 155,000 net retail postpaid handheld services, 2.9% postpaid handheld average revenue per user (ARPU) growth, and 6.4% mobile services revenue growth.

Pleasingly, more of the same is expected for Telstra's underlying EBITDA in FY 2023. Management has provided underlying EBITDA guidance of $7.8 billion to $8.0 billion. This represents a 7.5% to 10% increase year over year.

Dividend surprise

Also giving the Telstra share price a boost today was news that its board has decided to increase its dividend for the first time in seven years.

Telstra will be paying shareholders an 8.5 cents per share fully franked final dividend next month. This is up from 8 cents per share previously and means a full year dividend of 16.5 cents per share.

Telstra's CEO, Andy Penn, revealed that this increase reflects "the confidence of the Board" and "the recognition by the Board of the importance of the dividend to shareholders."

I'm not aware of a single broker that was expecting an increase today, so this has been a very pleasant surprise for the market and shareholders.

Motley Fool contributor James Mickleboro 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

A man surrounded by huge piles of paper looks through a magnifying glass at his computer screen.
Communication Shares

Why this fundie sees 'a potential turning point' for Seek shares

Blackwattle Investment Partners says Seek management appears to be refocused on shareholder returns.

Read more »

A woman sits in a cafe wearing a polka dotted shirt and holding a latte in one hand while reading something on a laptop that is sitting on the table in front of her
Communication Shares

Up 100% in a year, can the Superloop share price continue to deliver solid returns?

Superloop continues to generate momentum as its customer base expands.

Read more »

Two male ASX investors and executives wearing dark coloured suits sit at a table holding their mobile phones discussing the highest trading ASX 200 shares today
Communication Shares

Is the Telstra share price a buy right now?

Telstra shares have steadily risen over the last few months. Are they still good value?

Read more »

A cute little kid in a suit pulls a shocked face as he talks on his smartphone.
Dividend Investing

Up 38% in a year, is it too late to buy Telstra shares for the dividends?

A leading expert gives his verdict on Telstra’s passive income appeal following the stock's 38% 12-month share price gains.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Broker Notes

Why Macquarie forecasts this ASX All Ords media company is set to surge 19%

Up 42% in 2025, here’s why this ASX All Ords media stock could keep racing higher into 2026.

Read more »

A cute little kid in a suit pulls a shocked face as he talks on his smartphone.
Communication Shares

Where will Telstra shares be in 3 years?

How much business growth can Telstra shareholders look forward to?

Read more »

Magnifying glass in front of an open newspaper with paper houses.
Communication Shares

Should I buy News Corporation or REA Group shares?

News Corporation is the majority owner of REA Group.

Read more »

Two male ASX investors and executives wearing dark coloured suits sit at a table holding their mobile phones discussing the highest trading ASX 200 shares today
Communication Shares

Own Telstra shares? Here's what brokers are saying about its new strategy

Let's see what they are saying about this telco giant's bold new plans.

Read more »