I'd wager that if you asked the investors who own shares of Telstra Group Ltd (ASX: TLS) why they picked the ASX 200 telco as an investment, they would point to the dividend.
Ever since hitting the ASX in the 1990s, Telstra has been funding fat, fully franked dividend payments to its investors. These have had a few ebbs and flows since Telstra made its ASX debut. However, the company has made a name for itself over the past five or so years as a consistent income payer that tends to increase its dividends over time.
Telstra shares haven't cut their dividends since 2019. Investors even enjoyed a 5.88% dividend hike in 2024 compared to what was paid out in 2023.
But 2024's final dividend of 9 cents per share (fully franked, of course) has now reached shareholders' pockets. As such, investors' attention is probably now shifting to what 2025 might hold in store for dividend income.
After all, Telstra shareholders don't have much to show when it comes to 2024 share price gains. So that dividend is no doubt more important than ever for many investors.
As such, it might delight those investors to learn that Telstra could be considering getting a special dividend payment underway.
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Will Telstra shareholders get a special dividend?
Yesterday, Telstra held its annual general meeting (AGM) for shareholders.
According to a report in The Australian, Telstra's new chair, Craig Dunn, was asked about the telco's stake in pay-TV provider Foxtel. Telstra jointly owns Foxtel alongside News Corporation (ASX: NWS).
Dunn reportedly said that Telstra would support a sale of Telstra's 35% stake in Foxtel. He stated this:
We think that would be a sensible move or decision to make on behalf of shareholders… From time to time the importance of certain assets and their contribution to the value proposition we make to our customers does change… it's not clear to us long-term that (Foxtel) remains a part of our core business.
Dunn was then asked whether Telstra would return any capital arising from a sale of Foxtel to shareholders in the form of a special dividend. He reportedly stated that the company would indeed consider that option if the sale went ahead.
That might come as welcome news for shareholders. But even so, it's worth noting that the size of any special dividend would be entirely determined by what price Telstra can achieve for its Foxtel stake. If the company indeed offloads it in the first place.
It's also worth noting that special dividends like these tend to be one-offs. So, a special dividend is unlikely to impact the long-term valuation of Telstra shares. Let's see what happens.
