The Telstra Corporation Ltd (ASX: TLS) share price is surging higher this Thursday. At the time of writing, Telstra shares are up a healthy 3.66% to $3.97 a share. That share price represents a new 52-week high for this ASX 200 telco. That well eclipses the previous 52-week high of $3.88 a share that we saw earlier this week.

Telstra share price surges on FY2021 earnings report

It’s fairly obvious why Telstra shares are rising so steeply today. This morning, the telco released its FY2021 earnings report to the markets, and it has evidently been well received by investors.

As we covered extensively on the Fool earlier this morning, Telstra reported that its total income and earnings before interest, tax, depreciation and amortisation (EBITDA) both fell by 11.6% and 14.2% respectively. Even so, it managed to increase its net profit after tax by 3.4% to $1.9 billion. It also managed to bump up its free cash flow by 11.6% to $3.8 billion.

Those last numbers meant that the telco was able to keep its dividend steady at 8 cents per share. As well as initiate a $1.25 billion share buyback program.

This last news will probably come as a relief for income investors. These investors, perhaps still burned from Telstra’s 2017 dividend cuts, may have been nervously eyeing Telstra’s still-generous dividend yield. At an annualised 16 cents per share, Telstra is still offering a forward yield of 4.02% on current pricing.

The share buybacks have no doubt been welcomed by investors too. Buybacks, by decreasing the overall share count, increase each Telstra shares’ earnings per share (EPS), and are usually conducive to higher share prices due to the laws of supply and demand (less supply means higher prices).

At the current Telstra share price, the company has a market capitalisation of 36.4 million, and a price-to-earnings (P/E) ratio of 26.64.

The post The Telstra (ASX:TLS) share price is driving 4% higher on Thursday appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: Telstra, NAB, & QBE results
• Telstra (ASX:TLS) share price lifts off after dividend announcement
• Everything to know about the Telstra (ASX:TLS) $1.35bn share buyback
• Why GrainCorp, Myer, QBE, & Telstra shares are storming higher
• Telstra (ASX:TLS) share price on watch after hitting guidance & $1.35bn buyback

Motley Fool contributor Sebastian Bowen owns shares of Telstra Corporation Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Downer EDI Limited (ASX: DOW) share price is 4.42% higher in early afternoon trade following the release of the company’s full-year results for financial year 2021.

To the market’s delight, Downer this morning reported a profit for the financial year just been.

After closing yesterday’s session at $5.54, the Downer share price is currently $5.78.

Let’s take a closer look how Downer performed over the 12 months ended 30 June 2021.

The financial year that’s been for Downer

The Downer share price is responding well to the company’s full-year results.

Downer has reported an underlying net profit after tax and amortisation of $261.2 million ­– 21.4% more than it reported last year.

It also clocked in a statutory net profit after tax of $230 million. That’s a significant improvement from its previous financial year’s statutory net profit, which came in at a loss of $105.8 million.

The Downer share price is also likely being driven higher by its latest dividend.

The company has handed a 12 cent final dividend back to the holders of each of its shares. That brings its total dividends for the financial year to 21 cents. All dividends given to Downer’s shareholders during the 2021 financial year were fully franked.

Downer share price snapshot

Today’s 4.42% gain has helped boost recent performance on the ASX.

Shares in the company are now trading for 6% more than they were at the start of 2021. They’ve also gained 34% since this time last year.

For comparison, the S&P/ASX 200 Index (ASX:XJO) has gained 23% over the last 12 months.

The post The Downer (ASX:DOW) share price is driving 4% higher this afternoon appeared first on The Motley Fool Australia.

More reading

• ASX tech shares lagging the ASX 200 on Thursday
• ASX 200 midday update: Telstra, NAB, & QBE results
• The Downer (ASX:DOW) share price on watch after FY21 earnings
• 5 things to watch on the ASX 200 on Thursday
• Here are 3 of the most heavily traded ASX 200 shares today

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The AGL Energy Limited (ASX: AGL) share price is in the red straight out of the blocks in early trade.

AGL shares are on the move down as the energy giant updated its dividend schedule as part of its FY21 earnings report.

Let’s investigate a little further.

AGL’s dividend

AGL has an extensive dividend history that dates back to 2003. It resumed payments in 2013 after an eight year pause.

AGL’s dividend has been quite growth-agnostic across the term of its distribution schedule.

To illustrate, in the period of 2003 – 2021, AGL grew its dividend at a compound annual growth rate (CAGR) of only 1.94%. Prior to the dividend haircuts in 2020 and 2021, the CAGR was 7.2%.

In a negative note for the AGL share price, AGL declared a full year dividend of 75 cents per share in its FY21 results, which is an approximate 23.5% down-step from the year prior.

In addition, it is both the interim and final dividend of 35 cents and 41 cents respectively, that came in behind the previous year’s payouts.

The down-step occurred on the backdrop of a 10% year on year decrease in revenue, coupled with a 33.5% slide in underlying profits, to $537 million.

Furthermore, this caps of a choppy year for AGL, after it announced plans to demerge into two standalone businesses earlier in the year.

This coincided with the suspension of its special dividend program, where it intended to pay 25% of underlying profits to shareholders over the coming periods.

What does this mean for investors and the AGL share price?

Back on 30 July, we calculated that AGL’s dividend was not enough to overcome the underperformance of its share price on the charts over the last 5 years.

AGL shareholders still realised a loss of 12.4% on their initial investment, if purchasing 1,000 AGL shares on 1 March 2015 and holding until 30 July, when factoring in the total return received in capital gains and dividends. Stripping the dividend out of the equation, the loss mushrooms to 52%.

Therefore, some might argue that AGL’s dividend has provided some downside coverage over the past 5 years.

Furthermore, The Motley Fool encourages investors to consider the notion of a “value trap” when investing in dividend-paying shares, in AGL’s case.

To illustrate, there is an inverse relationship between dividend yield and price. When price goes down, yield goes up, and vice versa.

AGL’s share price has tanked more than 61% over the past 5 years, whereas its dividend has increased over that time.

The apparent dividend yield on AGL shares, therefore, appears to be high, but investors must also consider that this may not be an accurate representation of the investment case, due to the underperforming share price.

Such is the case right now with AGL shares, which now trade on a dividend yield of roughly 9–10% after this morning’s update.

In addition, given that dividends do provide some downside cover to share price depreciation, the down-step is unlikely to please investors.

Therefore, it stands to reason that investors are selling AGL shares in droves on the back of its FY21 dividend and results. To illustrate, AGL shares are now exchanging hands at $7.29 apiece, a 4% dip into the red from the open.

Foolish takeaway

AGL is reigning in its dividend payout further, as per its FY21 results. This marks a further downstep in AGL’s distribution schedule, which has faced headwinds over the last two years.

The AGL share price has posted a loss of 57% over the last 12 months and 39% since January 1. This is well behind the S&P/ASX 200 Index (ASX: XJO)’s return of around 25% over the past year.

Finally, investors also need to consider the concept of a value trap in their due diligence for dividend paying shares.

The post AGL (ASX:AGL) dividend slashed. Share price down 3% on Thursday appeared first on The Motley Fool Australia.

More reading

• AGL (ASX:AGL) share price on watch following FY21 earnings
• 5 things to watch on the ASX 200 on Thursday
• How did the AGL (ASX:AGL) share price perform last earnings season?
• What can we learn from the AGL Energy (ASX:AGL) share price history?
• Could it be time to consider buying AGL (ASX:AGL) shares?

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Rio Tinto Limited (ASX: RIO) share price has been the worst performer on the S&P/ASX 200 Index (ASX: XJO) on Thursday.

In afternoon trade, the mining giant’s shares are down 7% to $120.35.

Why is the Rio Tinto share price sinking?

The good news for shareholders is that the decline in the Rio Tinto share price has nothing to do with commodity prices or anything operational.

Rather, today’s decline has been driven almost entirely by the fact that the mining giant’s shares are trading ex-dividend today.

When a share trades ex-dividend, it means it is trading without the rights to an upcoming dividend payment.

As result, this morning the company’s share price dropped to reflect the fact that new buyers will not be receiving its upcoming dividend.

The Rio Tinto dividend

Eligible Rio Tinto shareholders can now look forward to receiving the company’s interim and special dividends next month on 23 September.

The mining giant is paying its shareholders fully franked dividends totalling 760.06 cents per share. This comprises an interim dividend of 509.42 cents per share and a special dividend of 250.64 cents per share.

As a comparison, the Rio Tinto share price has fallen 879 cents today. This means that 86% of this decline is attributable to the dividends that will be paid.

What about the rest?

The rest of the weakness in the Rio Tinto share price is likely to be due to profit taking from investors.

With Rio Tinto shares up strongly over the last 12 months, some investors may be cashing in now that they have locked in this bumper dividend.

Though, if analysts at Macquarie are on the money, it might be a little too soon to do that. At the end of last month the broker put an outperform rating and $162.00 price target on its shares. This implies potential upside of almost 35% over the next 12 months.

The post Why the Rio Tinto (ASX:RIO) share price is down 7% today appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: Telstra, NAB, & QBE results
• Is the Rio Tinto (ASX:RIO) share price a buy right now?
• How does the Rio Tinto (ASX:RIO) dividend compare to the materials sector?
• ASX 200 shares could get boost on prediction that A$ will crash to US68c
• How is the Mineral Resources (ASX:MIN) share price holding up against the materials sector?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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