Owners of Telstra Group Ltd (ASX: TLS) shares have at least one thing to look forward to in September – the Telstra dividend payment.
The ASX telco share has been committed to paying investors an attractive dividend with a high dividend payout ratio.
Telstra shares recently went ex-dividend, which means new investors won't be entitled to receive this upcoming dividend.
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Telstra dividend
The payment date for the upcoming dividend is 28 September, so it'll be hitting investor bank accounts in less than a month.
Telstra's board decided to declare a FY23 final dividend of 8.5 cents per share for the second half of the 2023 financial year. This added to the interim dividend of 8.5 cents per share, bringing the full year to 17 cents per share, which is an increase of 3%.
The company generated earnings per share (EPS) of 16.7 cents in FY23, which was an increase of 16%. While the business made a net profit after tax (NPAT) of $2.1 billion, its free cash flow after lease payments was $2.78 billion, according to Telstra.
At the current Telstra share price, the final dividend of 8.5 cents amounts to a fully franked dividend yield of 2.1%, or a grossed-up dividend yield of 3%.
Is the Telstra share price attractive?
I recently gave my own positive opinion on the ASX telco share:
The price/earnings (P/E) ratio isn't as cheap as it could be, but let's keep in mind that the company's underlying earnings are growing and so is the dividend.
I'd prefer to own Telstra shares over ASX bank shares because of its growing dividend and earnings outlook, as well as having a much stronger market position.
In my opinion, this is an opportunity to buy the dip and ride the earnings growth over the next few years.
There are currently many analysts who rate Telstra shares as a buy. Looking at the analyst recommendations of Commsec, there are no sell ratings, two hold ratings, and 12 buy ratings. In other words, the ASX telco share is highly rated right now.
In FY24, the company is aiming to achieve underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of between $8.2 billion to $8.4 billion.
At the time of the FY23 result release, Telstra CEO Vicki Brady said:
As connectivity increasingly underpins the way we live and work, Telstra is in a strong position to play an important role in Australia's digital future.
The infrastructure investments we are making, including our inter‐city fibre network and submarine cable network, will underpin a more digitised future and see us strategically positioned for growth.
We are working with customers across industries to help them to digitise and unlock productivity gains that flow through to the national economy and to global markets through our international business.
We also continue to invest in capabilities and partnerships to grow our offering in areas including Artificial Intelligence, data analytics, Internet of Things, and cyber security, and I am optimistic about the potential for growth in these areas beyond T25.
Indeed, the future could be bright for earnings and the Telstra share price.
