The Telstra Corporation Ltd (ASX: TLS) share price has had a poor run over the last few years, but some Telstra shareholders continue to hold the ASX 200 blue chip in the belief its famous dividends are earning sweet profit.
5 years ago today, the Telstra share price was trading at $5.77. Right now, it’s $3.74.
That’s 35% lower and means someone who bought a single Telstra share in 2016 would be $2.03 out of pocket today.
However, many believe that Telstra’s dividends offset any potential loss its share price might experience. But has that been proven over the past 5 years?
Thankfully, The Motley Fool has done the math to find out if Telstra shareholders are sitting in the green despite the Telstra share price being solidly in the red over 5 years.
Before we start, it’s worth mentioning many investors see value in Telstra’s dividends regardless of their value for money because of franking credits. In some cases, franking credits can reduce the amount of tax an investor pays.
Historically, Telstra’s dividends have always been fully franked.
Have Telstra’s dividends paid off?
Telstra shares are known for their dividends, and over the years they’ve been relatively reliable.
In fact, here’s a list of all the dividends Telstra has given its shareholders since the end of the 2016 financial year:
|Dividend payment date||Value of dividend|
|September 2016||15.5 cents per share|
|March 2017||15.5 cents per share|
|September 2017||15.5 cents per share|
|March 2018||11 cents per share|
|September 2018||11 cents per share|
|March 2019||8 cents per share|
|September 2019||8 cents per share|
|March 2020||8 cents per share|
|September 2020||8 cents per share|
|March 2021||8 cents per share|
So, here’s the answer to the age-old (well, five-year-old) question of whether it pays to keep Telstra shares for their dividends.
If an investor put $10,000 into Telstra shares on 26 July 2016, their holding would be worth around $6481 today. Not a great start…
However, they would have seen $1.085 worth of dividends per share over the life of their holding.
5 years’ worth of Telstra dividends (on a $10,000 investment made 5 years ago today) would total roughly $1,880 – not quite the $3,519 this poor fictional investor has lost on their original investment.
But not all hope is lost. Let’s not forget that Telstra plans to return half the proceeds of a $2.8 billion sale to shareholders this financial year.
Telstra share price snapshot
Despite being in the red long term, the Telstra share price is, over the short term, in the green.
Right now, it is around 24% higher than it was at the start of 2021. It has also gained around 11% since this time last year.