Bloomberg News

Telstra Hits 3-Year High on Div Yield: Sydney Mover

May 15, 2012

(Corrects amount of climb in first sentence to 3-Year)

Telstra Corp. (TLS), Australia’s biggest phone company, climbed to a three-year high in Sydney trading as investors targeted a dividend yield underpinned by government payments for the next decade

Telstra surged as much as 3 percent to A$3.75, its highest level since Feb. 2009, and was trading 2.8 percent higher at A$3.74 as of 1:54 p.m. The benchmark S&P/ASX 200 Index declined 0.8 percent.

The Melbourne-based company’s plans to pay a 28 cent dividend for the financial year ending June and the same amount in fiscal 2013, funded by cash from a government-owned high- speed Internet network. Telstra’s yield of 7.7 percent, which measures how much an investor will get from estimated dividends compared with its share price, is the highest of all stocks in the S&P/ASX 50 index, according to data compiled by Bloomberg.

“The money is rotating out of riskier assets into more defensive stocks,” said Stan Shamu, a market strategist at IG Markets in Melbourne. “What better place to park the funds than at Telstra, which has very good dividend yields.”

The yield is more than double the nation’s benchmark interest rate of 3.75 percent.

The company agreed last year to give control of its copper- wire network to the government-backed National Broadband Network in exchange for A$11 billion ($11 billion) of compensation.

To contact the reporter on this story: Soraya Permatasari in Melbourne at soraya@bloomberg.net

To contact the editors responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net; Andrew Hobbs at ahobbs4@bloomberg.net


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