When will the Telstra (ASX:TLS) dividend increase?

Is the Telstra dividend going to increase again soon?

James Mickleboro

Author Bio
James Mickleboro is an investment writer and analyst who has worked with The Motley Fool Australia for 10 years, covering ASX shares, market news, broker research, dividends, growth stocks, and long-term investing ideas.

Over that time, James has written extensively about Australian equities and developed a particular focus on helping everyday investors understand the stories behind share price moves, company announcements, broker views, and broader market trends.

His best investment recommendation was identifying Afterpay while it was still a small-cap growth share, before its rise into one of Australia’s biggest technology success stories. His worst investment lesson came from CSL Ltd (ASX: CSL), where he was burnt by believing management could turn the business around sooner than the market ultimately allowed.

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Growth and dividend investing
Broker research
Interpreting company announcements
Market news
Portfolio strategy
Long-term wealth creation

Education
Bachelor of Politics, Philosophy and Economics. CFA Institute
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James is the founder of Evermore Asset Management, which focuses on undercovered global stocks.

Favorite Investment Quote
"It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price."
— Warren Buffett

Published October 12, 2021 7:03 am AEDT

Luckily for income investors there are plenty of quality options for them to choose from. One of those could be the Telstra Corporation Ltd (ASX: TLS) dividend.

A smartly-dressed businesswoman walks outside while making a trade on her mobile phone. — Image source: Getty Images

Why the Telstra dividend?

After years of earnings declines and dividend cuts, this telco giant is now on the path to growth again. This follows a highly successful T22 strategy and the recent announcement of its upcoming T25 strategy.

That strategy will see Telstra aim for sustained growth and value by targeting mid-single digit underlying EBITDA and high-teens underlying earnings per share compound annual growth rates (CAGR) from FY 2021 to FY 2025.

Telstra's CEO, Andy Penn, commented: "Today's announcement of T25 marks our transition from transformation to growth, from a strategy we had to do, to a strategy we want to do to focus on growth."

"It is a strategy that builds on the strong foundations we have built over the last three years and remains focussed on what matters most – our customers, our people, our shareholders and on supporting the creation of a vibrant digital economy for Australia," he added.

Dividend growth

The announcement of this strategy has many analysts believing that Telstra dividend increases could happen at long last in the coming years.

For example, the team at Goldman Sachs have pencilled in dividends of 18 cents per share in FY 2024 and then 19 cents per share in FY 2025.

For now, though, the broker is expecting the Telstra dividend to remain at 16 cents per share fully franked in FY 2022 and FY 2023.

Based on the current Telstra share price of $3.85, this represents a 4.1% dividend yield.

Are Telstra's shares good value?

Goldman also sees plenty of upside left in the Telstra share price. It currently has a buy rating and $4.40 price target on its shares.

This suggests that there is 14% upside for the Telstra share price over the next 12 months. And if you include its dividend, the potential total return stretches to a very attractive 18%.

Overall, this could make Telstra a top option for investors this month.

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