The Telstra Corporation Ltd (ASX: TLS) share price is surging today. Telstra shares are up 2.52% to $3.25 a share at the time of writing, after rising from yesterday's close of $3.18 a share.
That means that Telstra shares are now up 7.9% year to date, and at their highest point since August 2020. They are also up around 21% from the 52-week low of $2.66 a share that we saw back at the end of October last year.
At the current share price, Telstra has a price-to-earnings (P/E) ratio of 21.25, a market capitalisation of $38.65 billion and a trailing dividend yield of 4.91%.
Why are Telstra shares lifting today?
The positive performance of the Telstra share price today follows the company's half-year earnings update delivered this morning.
Investors seem unfazed by Telstra reporting a 10.4% drop in net income and a 2.2% drop in net profits after tax.
The company did announce an expansion of its T22 cost-cutting program to an estimated $2.7 billion in savings by FY2022 though.
It also announced an update to its previously-announced legal restructuring. According to its CEO Andy Penn, Telstra will "commence the process for external strategic investment" of its InfraCo Towers division in the first quarter of FY2022.
Shareholders are no doubt hoping that this will lead to an unlocking of value.
Dividends to keep flowing
But perhaps Telstra's most significant announcement today was that it intends to uphold once again its dividend payment of 8 cents a share for its interim and final dividends. Telstra has paid an annual dividend of 16 cents per share for the past few years now. That consists of 10 cents a share in ordinary dividends and 6 cents in special dividends derived from NBN payments to the company.
However, due to falling earnings, many investors feared that Telstra will have to trim this dividend in the near future. Bad memories from the company's infamous 2017 dividend slashing probably don't help.
But this morning, Telstra announced that it would once again pay an 8 cents per share interim dividend (fully franked) to shareholders on 26 March. It also confirmed it would also be paying an 8 cents per share final dividend (also fully franked) on 23 September. That gives Telstra shares a forward dividend yield of 4.91% going forward (or 7.01% grossed-up with full franking).
