👉 Background: The Big T is our biggest telecommunications company by market share AND by revenue - at 47 years young, no less.

👉 What happened: Telstra announced its full year results and has really upped the ante by bumping up its dividend for the first time in a seven years.

👉 What else: You'd think think profits must be up too, right? But that's not quite the case. Telstra’s annual profit actually dropped 4.6% year on year to $1.8 billion. Buuut Telstra knows its shareholders expect reliable dividends, so it's giving the people what they want!

What's the key learning?

💡 Dividends are a way for companies to distribute their profit among shareholders. It's a bit of a thank-you-for-backing-us. A company profit that is paid out as dividends means that the company isn't reinvesting that money in the biz.

💡 That's why many high growth companies choose to re-invest profits. But when you’re already the size of Telstra, generally you’re ready to hand out a dividend to shareholders because you're not in high-growth phase anymore.

💡And investors love it. Companies that offer dividends give investors a recurring income and sends a signal that the management team has positive expectations for the future... which gives investors a reason to stick around.