Why the Telstra Corporation Ltd share price fell 3.5% today

The local share market may be sinking lower today, but one popular blue chip share is falling more than most.

At the time of writing the Telstra Corporation Ltd (ASX: TLS) share price has fallen almost 3.5% to $3.37.

This means that the telco giant’s shares have now lost 30% of their value since this time last year.

Why are Telstra’s shares falling again?

Considering the seemingly endless amount of bad news that has come out of the company over the last 12 months, you would be forgiven for thinking that there has been another negative development.

But pleasingly this decline has nothing to do with Telstra’s performance and everything to do with its interim dividend.

This morning Telstra’s shares went ex-dividend for its fully franked 11 cents per share interim dividend.

This means that eligible shareholders can now look forward to receiving this distribution in their nominated accounts on March 29.

Should you buy Telstra’s shares?

At the time of writing Telstra’s shares are down 11.5 cents, compared to its 11 cents per share dividend.

I think is an indication that there haven’t been many shareholders waiting purely for its shares to go ex-dividend before heading to the exits, which could be a sign that the market has confidence in Telstra again.

I certainly do. I think the company has steadied the ship and is more than capable of maintaining its current dividend for at least the next two years.

After which, as I have said a few times before, a lot will depend on the success of its investments, the magnitude of its cost cutting program, and the arrival of 5G internet in Australia.

In light of this, I think Telstra is a great dividend option alongside the likes of Accent Group Ltd (ASX: AX1) and WAM Capital Limited (ASX: WAM).

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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