Why did the Telstra share price beat the ASX 200 in March?

Despite going ex-dividend, Telstra shares outperformed the market last month.

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Key points

  • Telstra shares went up more than 1% last month, while the ASX 200 declined 1%
  • The telco managed this outperformance even with Telstra going ex-dividend at the start of the month
  • A director bought over $100,000 of shares during the month

The Telstra Group Ltd (ASX: TLS) share price managed to beat the return of the S&P/ASX 200 Index (ASX: XJO) in March 2023, despite the telco going ex-dividend during the month.

During March, Telstra shares climbed by 1.4% while the ASX 200 dropped by 1.1%. An outperformance of 2.5% in just one month is solid outperformance for an ASX blue-chip share.

Telstra shares went ex-dividend

Telstra started the month's performance at a disadvantage after going ex-dividend on 1 March 2023.

That means investors who buy shares on that date (and from then on) are not entitled to the upcoming dividend.

Telstra's half-year dividend was 8.5 cents per share, which represented an increase of 6.25%. Grossed-up for franking credits, the total payment was around 12 cents per share. So, it was perhaps not a surprise that the Telstra share price dropped by 12 cents on the ex-dividend date of 1 March.

But, from that date, Telstra shares climbed by around 4.5% to the end of the month.

What went wrong for the ASX 200?

The ASX 200 didn't drop by much. Certainly, 1.1% is not like some of the declines we saw in 2020 and 2022.

But, last month we saw a lot of pain for the global banking sector after difficulties for Silicon Valley Bank (SVB) and Credit Suisse.

While the ASX bank sector aims to be 'unquestionably strong', investors still went negative on banking shares in Australia. In turn, the performance of the banking sector had a significant influence on the negative direction of the ASX 200.

Over the month, the Commonwealth Bank of Australia (ASX: CBA) share price fell 2.3%, the National Australia Bank Ltd (ASX: NAB) share price declined 7.6%, the ANZ Group Holdings Ltd (ASX: ANZ) share price declined 7%, and the Westpac Banking Corp (ASX: WBC) share price dropped 3.9%.

Together, those bank movements caused a negative hit for the ASX 200.

Did anything important happen for Telstra shares?

Reporting season was in February 2023, so it wasn't as though investors were reacting to the Telstra result during March.

But, the result did show a number of pleasing things, including a 6.4% rise in total income to $11.6 billion and a 27.1% rise in earnings per share (EPS) to 7.5 cents.

The company also said it's making progress on its T25 strategy with the business focusing on a number of things, including improving the customer experience, having a strong 5G network, growing margins, and increasing the dividend.

Interestingly, we did see that Telstra director Ming Long decided to buy some Telstra shares on the market, buying a total of 25,589 for a cost of $105,123.39. That's an average price of around $4.11.

Coincidence or not, the Telstra share price steadily climbed over the rest of the month after news of the director's investment. Investors may have gained confidence from the director deciding it was a good time to buy.

Motley Fool contributor Tristan Harrison 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 has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Westpac Banking. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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