Why the Telstra (ASX:TLS) share price just hit a 7-month high

The Telstra Corporation Ltd (ASX:TLS) share price has just hit a 7-month high. What is driving investors into the company’s shares today?
The post Why the Telstra (ASX:TLS) share price just hit a 7-month high appeared first on The Motley Fool Australia. –

Telstra Corporation Ltd (ASX: TLS) shares are having a fantastic day today. The Telstra share price is up a healthy 2.4% at the time of writing to $3.41 after hitting $3.44 earlier today. That’s the highest share price Telstra has enjoyed since August 2020, a good 7 months ago now.

It’s a move Telstra shareholders would have enjoyed too. Since hitting a new 52-week low of $2.66 back in October, Telstra shares are now up around 28% on today’s prices. The company is also up around 12% since 11 March, and up 14% year to date.

So what is causing this climb in the Telstra share price?

Well, the latest piece of hot gossip out of Telstra came this morning. As we covered earlier, Telstra has decided to call it a day on the New Zealand Stock Exchange and will delist on the NZX on 16 June. Whilst that is an interesting development (and may spark some good-natured trans-Tasman schadenfreude from ASX investors), it is unlikely to be a catalyst for today’s upward move in the Telstra share price.

That’s because, as the company outlined in its announcement, current New Zealand shareholders will receive ASX shares in exchange for their NZX shares, and can continue to receive their dividends in New Zealand dollars.

Telstra share price rings it in

Instead, we can probably credit Telstra’s gains today to a continuation of the positive momentum the ASX telco has been enjoying over the past few months. This has been pushed by two factors.

First, the corporate restructure that Telstra announced earlier this week. The telco is intending to separate the company into four semi-autonomous divisions by December, each housing a different portfolio of assets. These will be InfraCo Towers, InfraCo Fixed, ServeCo and Telstra International. The company is expecting this move to unlock value for shareholders. As well as potentially allow InfraCo Fixed to bid for the nbn network when it is eventually sold by the government. It won’t be a full-blown spin-off, with shareholders still owning a holding company called Telstra Group. But it seems to have gotten investors excited, nonetheless.

Secondly, Telstra’s generous dividend seems to have caught the eye of many of an investor in this era of rising government bond yields. Telstra kept its dividend steady last year at 16 cents per share. It has also committed to paying out 16 cents again this year.

Even after the recent Telstra share price gains, this still equates to a forward dividend yield of 4.69%, or 6.70% grossed-up on the current share price. That yield is among the upper echelons of what ASX 200 blue-chip shares are offering right now.

It’s likely momentum from these factors that are pushing the Telstra share price to their new highs today.

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Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the Telstra (ASX:TLS) share price just hit a 7-month high appeared first on The Motley Fool Australia.

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