Telstra loves the D
D = Dividends. Telstra has maintained its dividends, despite a fall in profit.
What's the key learning?
WTF is a dividend?
A dividend is basically when a company hands out some of its earnings to its shareholders. It’s kind of like a present to say ‘thanks for believing in us and having our back’. Companies can increase this dividend amount or they can decrease it.. Depends how they feel about the company’s financial state.
Telstra maintains its dividends
Telstra has maintained the same dividend at 8c - even though the company’s profits dropped for its half year results. In fact, profit before tax was down 20 per cent to $1.33 billion
So what's the key learning?
Generally, only larger, more established companies pay consistent dividends. Why you ask? Because they have more predictable profit (like the Big T).
Whereas at the other end of the spectrum, earlier stage companies tend to not offer dividends.That’s because startups would rather allocate available cash to initiatives that will help the business succeed or grow
- Afterpay - never paid a dividend
- Xero accounting software - never paid a dividend
And while dividends are great for shareholders in the short term, many would prefer for the money to stay in the business so that it can be reinvested in the company’s growth.