Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
Retiree love affair with Telstra dividends on display again
What goes up, must come down, as the old saying goes. That is, unless it’s Telstra’s (ASX: TLS) dividend.
Long the stalwart of income-obsessed retirees, especially of the self-funded variety, Telstra’s dividend is on the rise again, despite the company reporting a falling profit for the 2023-24 financial year.
Following a ‘reset’ of the dividend in 2018, sentiment towards the company is turning positive, with the share price jumping five cents yesterday from its opening price to close at $3.95 after briefly threatening $4 when it reached $3.985.
Over the past three months, Telstra’s share price has improved nearly 60 cents or more than 15 per cent.
Although the headline result, which showed a 13 per cent fall in profit to $1.79 billion, left a lot to be desired, at ground level its performance is improving, and that could bode well for the share price.
Beneath the concern of a falling profit was another strong result from the group’s mobile business, reporting a nine per cent increase to $5 billion as the company added 560,000 new customers. Combine this with the pending price rises across both post and pre-paid plans and it is clear Telstra is looking to leverage its market dominance.
The key drivers behind the fall in profit were self-inflicted, and, in most cases, will be confined to the past. There was a $45 million write-down on the group’s ambitious plans to launch a retail energy business, along with $247 million in expenses associated with redundancy packages for 2,800 employees. But the biggest hit came from a $311 million write-down of the enterprise business that services companies and governments.
The spun-out infrastructure business is also beginning to improve, with earnings growing six per cent to $1.7 billion due to its partnership with the NBN. The result was a boost in the dividend by six per cent, which takes the current yield to about 6.3 per cent (including franking).
On the wrong side of the market yesterday was global healthcare leader Cochlear (ASX: COH). Shares in Cochlear fell by more than seven per cent to close at $313, despite the company posting a 27 per cent increase in profit. Another reminder of why expectations are what matters, not results, during the reporting season.
The company posted a $357 million profit on revenue of $2.3 billion, which was 15 per cent higher than the previous year. It also lifted its dividend by 24 per cent to $4.10 a share.
But shareholders weren’t listening to that good news. They were more disappointed by the company’s guidance that profit growth in 2025 would only be between six per cent and 11 per cent.
