Can Telstra shares deliver an attractive dividend yield AND 13% upside in 2022?

What might be in store for Telstra shareholders this year?

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Key points

  • A top broker is predicting the Telstra share price has a 12.8% upside, slapping with a $4.56 price target
  • The broker is also expecting the telco giant to pay out 16 cents dividends this financial year, and the same again in financial year 2023
  • If all the expert's predictions come true, Telstra will soon have a dividend yield of 3.5%

The Telstra Corporation Ltd (ASX: TLS) share price has had a rough start to 2022.

It’s slumped 4% since the start of this year amid anticipation of its T25 strategy and news its long-term CEO, Andy Penn, will step down in September.

Right now, the company’s stock is trading at $4.04 apiece.

For context, the S&P/ASX 200 Index (ASX: XJO) has also had a rocky start to the year. Today’s 1.6% dip has put it back into the year-to-date red. It’s now 1.5% lower than it was at the start of 2022.

However, the Telstra share price is outperforming its home sector. The S&P/ASX 200 Communication Index (ASX: XTJ) has slumped 9% this year.

But the future might be brighter for the telecommunications giant. Here’s what one top broker is expecting from the Telstra share price and the company’s dividends.

Could owners of Telstra shares be in for a good year?

Telstra, its share price, and its dividends have been plagued by NBN dramas over the last few years, but that seems to be behind the company now.

On releasing its half-year earnings, the company noted this financial year would bring the last of the major negative effects of its transition to the network.

As a result, momentum in its underlying performance is expected to show through in the near future.

At the same time, Telstra will turn to its T25 strategy. And one of the most notable aspects of the plan – for its investors at least –­ regards the company’s dividends.

Over the next three years, the ASX 200 telco giant will seek to maximise fully franked dividends. To do so, it will cut costs and add shareholder value.

So, what sort of dividends and returns are brokers expecting the company to provide in the coming years?

As The Motley Fool Australia’s James Mickelboro recently reported, Morgans is bullish on Telstra’s shares and dividends.

It’s slapped the Telstra share price with a $4.56 price target and an ‘add’ rating.

The top broker is also expecting the telco to pay out 16 cents of dividends per share for this financial year and next.

That’s on the money so far. Telstra declared an 8 cent per share fully franked interim dividend in February.

If both Morgans’ predictions come true, that would leave Telstra with a dividend yield of 3.5%.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended Telstra Corporation Limited. 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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