Telstra Corporation Ltd (ASX:TLS) Dividend – Will It Be Cut Again?

For many years, Telstra Corporation Ltd (ASX: TLS) has been a stalwart in investors’ portfolios for its reliable and juicy dividend, especially those looking for income such as retirees.

However, in the 2017-18 financial year Telstra slashed its dividend citing earnings headwinds from the NBN as it lost some of its competitive advantage which has been previously detailed here. Telstra’s dividend was cut by 29% from 31 cents per share (cps) to just 22cps in FY18. The share price too has fallen from $5.10 at the start of 2017, to a low of $2.57 in June 2018.

Will Telstra Lose Other Competitive Advantages?

One other advantage Telstra has had for a long time is that it boasts the superior mobile network in the country which competitors such as Optus, TPG Telecom Ltd (ASX: TPM), Vocus Group Ltd (ASX: VOC) and Vodafone Australia or Hutchinson Telecommunications Ltd (ASX: HTA) have not been able to compete with in terms of quality or reliability.

Part of the reason for Telstra’s dominance is due to its financial firepower or reliable cash flows which have been used to invest in mobile infrastructure that its competitors simply could not match.

Will There Be Another Mobile Competitor?

Aside from Optus and Vodafone Australia, TPG looms as a potential competitor in the mobile space that must be respected, especially if a joint venture with Vodafone Australia is given the green light by the ACCC. Or will TPG take its bat and ball and refuse to play?

Dividends Forecast To Be Cut

Telstra chief executive Andy Penn previously said Telstra would move away from a 100% dividend payout ratio to a range between 70% and 90%.  Analysts are expecting earnings to decline over the next few years so investors should also expect the dividend to follow suit. Morningstar has a forecast dividend of 15.9cps.

3 tech stocks for a massive COVID-19 rebound

Amidst the COVID-19 confusion, some cloud-based companies are growing... FAST!

Meanwhile, industry researchers are valuing the entire cloud computing market at $US210 billion. If you ask me, it seems clear as day that this HUGE market is only going to get bigger in 2020 and beyond.

Our top investment analyst has just identified 3 growth stocks in a net cash position, with strong competitive forces... and obvious tailwinds at their back.

Claim your FREE investing report on our analyst's "3 best share ideas for the cloud revolution" when you create a free Rask Australia account.

Our report is 100% free and unlocks hundreds of hours of bonus content.

Simply click here to access the report.

Disclaimer and warning: This information is published by The Rask Group Pty Ltd and contains general financial advice and information. That means, the information/advice does not take into account your objectives, financial situation or needs. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. Please read our Terms of Service and Financial Services Guide before using this website.

Andrew Schonberger

Andrew Schonberger

Andrew is a qualified Chartered Accountant (CA) with a strong passion for finance and investing.