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Highlights
- Telstra has grown its annual dividend consecutively from FY22 to FY24, with a 6% increase in FY24.
- FY24 dividend translates to a 6.4% grossed-up yield, including franking credits.
- UBS projects Telstra's dividend to grow by 50% between FY24 and FY29, reaching 27 cents per share.
Telstra Corporation Limited (ASX:TLS), the largest utility company in Australia and a dominant ASX-listed telco, continues to showcase its strength as a defensive dividend stock. With its robust mobile and broadband offerings, Telstra remains a critical service provider for households and businesses alike, underpinned by growing mobile earnings and a consistent rise in user numbers.
Dividend Growth and Yield
Telstra has demonstrated a commitment to rewarding shareholders, with annual dividend increases for three consecutive financial years: FY22, FY23, and FY24. Most recently, the company declared an FY24 dividend of 18 cents per share, marking a 6% increase year-on-year. When grossed up with franking credits, the FY24 dividend offers a yield of 6.4%, positioning Telstra as an attractive option for income-focused investors.
For those investing in Telstra shares, the dividend income can be a meaningful addition to household finances. For example, a $15,000 investment in Telstra shares would generate approximately $960 in annual income, potentially covering a significant portion of annual phone or broadband expenses.
Future Dividend Growth
Looking ahead, the outlook for Telstra’s dividend remains positive. UBS analysts project a 5.5% increase in the company’s dividend for FY25, reflecting Telstra’s ability to sustain and grow earnings in its defensive mobile segment. Over the longer term, Telstra’s annual dividend per share is forecasted to rise by 50% between FY24 and FY29, reaching 27 cents per share.
Defensive Mobile Earnings
Telstra’s mobile segment continues to drive growth, benefiting from an expanding user base and higher prices. This consistent growth in mobile profits underlines the defensive nature of its earnings, making it a reliable choice for investors seeking stable income in uncertain economic environments.
