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.
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.
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.