Telstra Corporation Ltd (ASX: TLS) reported its FY21 half year result
and also announced its dividend. The Telstra share price is up 3% in reaction.
What is Telstra’s HY21 dividend?
The board of Telstra decided to declare an interim dividend of 8 cents per share, which means that the annualised dividend is still at 16 cents per share.
Telstra’s dividend has been at this level since 2019. The telecommunications company has provided guidance that the annual dividend will likely be 16 cents per share again in FY21.
The company generated earnings per share (EPS) of 9.2 cents in the half-year, which means that the dividend payout ratio is 87% of its earnings for this result.
Telstra’s HY21 financial numbers
Telstra reported that its total income fell by 10.4% to $12 billion.
Looking at the reported EBITDA (EBITDA explained), it decreased by 14.7% to $4.1 billion. After adjusting for lease accounting changes (AASB 16) on a like for like basis, EBITDA fell by 11.7% to $4 billion.
Underlying EBITDA fell by 14.2% to $3.3 billion. The largest two contributors to the decline were the NBN headwind impact of $370 million and an estimated $170 million impact from COVID-19. Excluding both of these, underlying EBITDA was broadly flat compared to the first half of FY20. Telstra’s net profit after tax fell 2.2% to $1.1 billion.
Store changes
Telstra also announced today that there would be changes to its retail store network. It intends to transition to full Telstra ownership of its bricks and motar branded retail stores across Australia.
Telstra has 67 owned and operated stores, with another 166 branded stores run by independent licensees and a further 104 stores operated by Vita Group Limited (ASX: VTG).
The telco said that the move was required to keep pace with the growing digital economy and give Telstra more flexibility to respond to customer needs.
Is Telstra worth buying for the dividends?
The current Telstra share price translates to a fully franked dividend yield of 4.9%. That’s not a bad yield in the current environment, if you’re not looking for income growth.
But I think that investors should first focus on companies that are growing their business over time, and only if they tick the growth box then consider the dividend. Telstra is still struggling to grow profit, so you could click on this link to ASX dividend shares and find lots of ASX stock ideas and analysis.
Before you consider Telstra, I also suggest getting a free Rask account and accessing our full stock reports. Click this link to join for free and access our analyst reports
