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The S&P/ASX 200 Materials Index (ASX: XMJ) is dragging the S&P/ASX 200 Index (ASX: XJO) into the red on Friday as many of the market’s biggest mining shares struggle.

The materials sector has fallen 1.8% at the time of writing following a disastrous night for iron ore. For context, the ASX 200 is up 0.02% right now

ASX 200 mining giants BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO), and Fortescue Metals Group Limited (ASX: FMG) are among those suffering. Their share prices are falling between 1.8% and 2.5% right now.

So, what’s weighing on the sector on Friday? Let’s take a look.

What’s going wrong for ASX 200 mining shares?

ASX 200 mining shares are sliding on Friday as a major lockdown in China weighs on sentiment for materials.

Chengdu, the capital of China’s Sichuan province, is in lockdown after 157 COVID-19 infections were detected in the city, BBC News reports. That sees around 21 million people in lockdown.

Fears the lockdown could further hamper the nation’s recovery seemingly weighed on iron ore futures overnight. It plummeted 8% to US$96.39 a tonne.

Meanwhile, base metals tumbled as much as 7.6% after Chinese factory activity was found to have fallen in August, according to CommSec.

To top it off, Macquarie has reportedly downgraded its outlook for the copper price and slashed earnings forecasts for copper miners as a result, The Australian reports.

The broker is also said to have dropped its price targets for Sandfire Resources Ltd (ASX: SFR), 29Metals Ltd (ASX: 29M), BHP, and Rio Tinto by between 17% and 3%.

Today’s tumble comes after the ASX 200 sector housing the market’s mining shares posted a whopping 4.9% loss on Thursday. It’s currently 10.2% lower than its August peak.

Lithium shares are among today’s worst performers. Shares in Mineral Resources Limited (ASX: MIN), Lake Resources NL (ASX: LKE), and Core Lithium Ltd (ASX: CXO) are currently the ASX 200 materials index’s biggest weights, falling 5.7%, 5.3%, and 5.4% respectively.

The post Why are ASX 200 mining shares getting hammered on Friday? appeared first on The Motley Fool Australia.

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More reading

• Why is the Mineral Resources share price down a hole on Friday?
• Is the BHP share price 7% cheaper after trading ex-dividend? 
• What’s the outlook for ASX 200 copper shares in September?
• Why is the BHP share price tumbling again on Friday?
• These ASX 200 shares are going ex-dividend on Monday

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 recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Mineral Resources Ltd (ASX: MIN) share price is losing ground on Friday despite no announcements from the company.

At the time of writing, the mining services company’s shares are trading at $59.03, down 4.47%.

For context, the S&P/ASX 200 Index (ASX: XJO) is down 0.2% during early afternoon trade.

What’s going down today?

As the broader market struggles to stay afloat, it’s the Mineral Resources share price that’s tanking heavily. This is likely because its shares are trading ex-dividend today.

This means if you purchased Mineral Resources’ shares yesterday or before and owned them at market open today, you’ll be eligible for the latest dividend. If you buy shares in the company today, you’ll miss out on the dividend payout.

Eligible shareholders will receive a fully franked dividend payment of $1 per share on 23 September.

Despite the success achieved, Mineral Resources did not declare an interim dividend in FY 2022. This was due to market uncertainty and a substantial reduction in iron ore prices over the first half of the year.

In FY 2021, the board paid out $2.75 in dividends to shareholders.

Are Mineral Resources shares a buy?

Following the company’s 2022 financial scorecard, a number of brokers updated their ratings on Mineral Resources shares.

As reported by ANZ Share Investing, broker Jefferies raised its price target by 21% to $75 per share. Based on the current price, this implies an upside of 26%.

In addition, Goldman Sachs and Bell Potter increased their price targets by 9% to $69.50, and 5.6% to $80, respectively.

However, the most bullish note came from Macquarie which lifted its outlook by 9.9% to the psychologically significant $100 mark.

The strong price target implies an upside of more than 30% from where Mineral Resources trades today.

Mineral Resources share price snapshot

Throughout the year, the Mineral Resources share price has travelled in circles as lithium prices surged, but iron ore tanked.

Shares in the company are up 10.7% over the past 12 months.

In comparison, the S&P/ASX 200 Resources Index (ASX: XJR) is up just 0.8% over the same period.

Mineral Resources has a price-to-earnings (P/E) ratio of 31.90 and commands a market capitalisation of approximately $11.17 billion.

The post Why is the Mineral Resources share price down a hole on Friday? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• How do IGO shares compare to Mineral Resources following earnings season?
• The Pilbara Minerals share price surged 30% in August. What now?
• Here are the top 10 ASX 200 shares today
• Mineral Resources share price slides as dividend drops 43%

Motley Fool contributor Aaron Teboneras 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 Scott Phillips.

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It’s not often that one ASX share on the S&P/ASX 200 Index (ASX: XJO) can drag the whole market down. But that is arguably what happened to the ASX 200 yesterday. But was it really all thanks to the BHP Group Ltd (ASX: BHP) share price?

Yesterday saw the ASX 200 lose a nasty 2% of its value. But the BHP share price shed a seemingly nastier 7.61%, falling from $40.60 at Wednesday’s close to $37.51 a share by the end of yesterday’s session.

As such, it’s very possible that BHP was almost solely responsible for the woes that the market saw yesterday, thanks to the fact that BHP is by far the largest ASX 200 share on the ASX 200. That gives it the most weighting in the index by market capitalisation.

But investors probably weren’t too worried about yesterday’s falls. That’s because it was largely a result of BHP trading ex-dividend for its upcoming dividend payment.

BHP shares are set to pay out the company’s final dividend of US$1.75 per share on 22 September later this month. We don’t yet know the exact amount in Australian dollar terms, but at today’s exchange rates it would be roughly worth $2.58 per share.  

That would be worth a yield of approximately 6.35% on Wednesday’s closing share price, which accounts for the lion’s share of the losses we saw the subsequent day.

Are BHP shares cheaper today than before the ex-dividend date?

So does this mean investors should have waited until yesterday to buy BHP shares, given they were trading more than a 7% discount to where they were on Wednesday?

Well, not really. See, when an ASX share trades ex-dividend, its share price usually falls by a similar amount to what that dividend was worth. But this sadly doesn’t really give investors a bargain buy.

Investors who bought BHP shares on Wednesday would be roughly no better or worse off than those who bought yesterday, despite the 7% share price gap. That is because an ex-dividend date represents the cutoff for new investors to receive the dividend.

Those investors who bought on Wednesday are eligible to receive the US$1.75 per share dividend. Those who bought yesterday or since are not.

Thus, even though they got to buy BHP shares at a cheaper share price yesterday than that of Wednesday, the dividend that the Wednesday buyers will receive almost makes up for that share price loss. The rest of the loss is what would have happened to BHP shares anyway.

The market knows when a share will trade ex-dividend, so it tends to automatically adjust its bidding and asking prices, moving the company’s share price accordingly. There’s no free lunch here.

So BHP shares were cheaper yesterday because of its ex-dividend date, not despite it.

But today’s loss of 2% or so? I’m afraid that’s just a normal share price fall.

At the current BHP share price, this ASX 200 mining giant has a market capitalisation of $186.17 billion, with a dividend yield of 12.55%.   

The post Is the BHP share price 7% cheaper after trading ex-dividend?  appeared first on The Motley Fool Australia.

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More reading

• What’s the outlook for ASX 200 copper shares in September?
• Why is the BHP share price tumbling again on Friday?
• Another tough day on the ASX; and BHP goes ex-dividend. Scott Phillips on Nine’s Late News
• Why BHP, Deep Yellow, Nickel Industries, and PointsBet shares are dropping
• Why is the ASX 200 diving 2% on Tuesday?

Motley Fool contributor Sebastian Bowen 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 Scott Phillips.

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The Infinity Lithium Corporation Ltd (ASX: INF) share price is in the green today.

Shares in the ASX lithium explorer are currently up 9%, trading at 18 cents apiece after earlier spiking 18% higher to an intraday high of 20 cents.

Meanwhile, S&P/ASX 200 Materials Index (ASX: XMJ) is down on Friday, recording a 1.83% loss at the time of writing.

So Infinity Lithium Corp shares are flying high above its peers’ aggregate share price performance in the basic materials sector — but how come?

The short of it is that the company made a significant announcement this morning. Let’s take a look.

What’s going on with the ASX lithium share?

The company advised that Extremadura, an autonomous community in Spain, has declared that lithium extraction and processing are of “regional and general interest”. Consequently, the community’s regional government has passed a new decree-law for lithium projects to incorporate lithium processing in their operations.

This is bullish news for Infinity Lithium, as its San José lithium extraction and processing plant is already well-established in Extremadura’s province of Caceres.

Extremadura New Energies CEO Ramón Jiménez was quoted in the company release today as saying:

San José is a world-class and large-scale integrated lithium project built on the foundations of a very significant hard rock lithium resource.

The progressive vision of the government ensures the feedstock at San José is aligned to the strategic interests of the region through an integrated facility that has become the blueprint for all lithium projects in Extremadura.

The company welcomed the stance, saying:

The decree has reinforced lithium as a product of regional interest and integrated lithium operations as regional interest business projects (‘PREMIA’), in effect prioritising permitting, recognition as public utility projects, and access to employment grants.

Infinity Lithium share price snapshot

Despite today’s gains, the Infinity Lithium share price is down 5.26% year to date. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has dropped 9.91% lower over the same period.

The company’s market capitalisation is around $72 million at the time of writing.

The post Why did this little-known ASX lithium share rocket 18% on Friday? appeared first on The Motley Fool Australia.

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More reading

• Why is this ASX energy share diving 10% on Friday?
• What’s the outlook for ASX 200 copper shares in September?
• Why the Bitcoin price was struggling today
• The gold price should be doing well, so why isn’t it?
• Why did the Novonix share price crumble 14% in August?

Motley Fool contributor Matthew Farley 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 Scott Phillips.

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The TerraCom Ltd (ASX: TER) share price is feeling the heat today.

While the S&P/ASX 200 Index (ASX: XJO) has edged 0.1% lower at the time of writing, the TerraCom share price has been crunched by 10.3% to sit at 91 cents.

Why the TerraCom share price is being smoked

Instead of ASX announcements or sector news driving this fall, the ASX energy share’s tumble today likely comes down to one primary driver.

TerraCom shares are trading ex-dividend today. And the dividend in question is a juicy one.

When a company declares a dividend, it sets a cut-off date to determine which shareholders are eligible for the payment. This is known as the ex-dividend date.

If you purchase shares on or after this cut-off date, you don’t receive the payment.

So, investors buying the ASX energy shares today won’t be getting their hands on TerraCom’s 10-cent FY22 final dividend.

The emerging resources explorer recently announced a bumper set of FY22 results. Revenue jumped 47% to $805 million while losses on the bottom line reversed to a $216 million profit.

What’s more, TerraCom updated its dividend payout ratio. It’s now intending to return between 60% and 90% of profits to shareholders in the form of quarterly dividends.  

The last time TerraCom paid a dividend was in 2019. 

Why do shares drop on the ex-dividend date?

When a company’s shares turn ex-dividend, its share price typically drops. 

This is because the company is paying dividends out of its cash reserves. So, with its war chest of cash reduced, the value of the company is diminished.

What’s more, some investors will look to offload shares once they’ve locked in the upcoming dividend. 

The extent of the share price fall usually mimics the size of the dividend. But it varies depending on sentiment and how the broader market is faring that day.

In the case of TerraCom, the dividend in question is 10 cents. At the time of writing, the TerraCom share price has fallen by 10.5 cents, slightly more than the dividend.

Which other shares are trading ex-dividend today?

You can see similar price action in Ampol Ltd (ASX: ALD) shares today. It’s the first day that Ampol shares are trading without the company’s 2022 interim dividend of $1.20. And at the time of writing, Ampol shares have tumbled by 5.2% or $1.75 to $31.91.

Base Resources Ltd (ASX: BSE) is another company coming under fire today. The Base Resources share price has slid 13.4% or 4.5 cents to 29 cents apiece as shares trade without a 2022 final dividend of 3 cents.

The post Why is this ASX energy share diving 10% on Friday? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Friday
• Here are 5 ASX 200 shares going ex-dividend tomorrow
• TerraCom share price rockets on 900% dividend upgrade
• ASX falls, eyes on the Fed and huge petrol profits. Scott Phillips on Nine’s Late News
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Cathryn Goh 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 Scott Phillips.

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Macquarie has reduced its forecast for copper prices over CY22 to CY24 by 5% to 15%.

According to The Australian, the broker reckons softening demand is “set to widen the surplus”.

As is usual with ASX mining shares, a change in copper price forecasts has a flow-on effect on the performance expectations for ASX 200 copper shares.

The article stated:

The downgrades have a material impact on near-term earnings forecasts for copper pure plays, with earnings estimates for Oz Minerals, Sandfire and 29Metals down by 30% to 90%.

Down those 12-month price targets go for ASX 200 copper shares

On the back of these forecasts, Macquarie has also reduced its share price targets for multiple ASX 200 copper shares.

The broker cut its price targets on Oz Minerals Limited (ASX: OZL), Sandfire Resources Ltd (ASX: SFR) and 29Metals Ltd (ASX: 29M) by 9% to 17%.

Of course, Sandfire and 29Metals are outside the ASX 200. But the broker has also cut its projections on two of the big ASX 200 miners that are not copper pure-plays but they do produce the red metal.

Macquarie cut its 12-month share price target for BHP Group Ltd (ASX: BHP) to $42, and Rio Tinto Limited (ASX: RIO) to $97.

Today, the copper pure-plays are a mixed bag. The Oz Minerals Limited (ASX: OZL) share price is only just in the green, up 0.12% to $25.33 at the time of writing. Meantime, the Sandfire Resources Ltd (ASX: SFR) share price is down 3.2% to $3.93. The 29Metals Ltd (ASX: 29M) share price is down 2.1% to $1.88.

What about the long-term outlook for copper?

The market was abuzz in early August when BHP made a surprise takeover bid of Oz Minerals.

The offer was for $25 cash per share, about a 35% premium on the Oz Minerals share price at the time.

The Oz Minerals board quickly rejected the offer, saying it “significantly undervalues” the company.

But the mere fact that the biggest resources company in the ASX 200 made a play for it certainly communicated a lot to investors about the critical role of copper in our decarbonised future. Kinda says something about the long-term outlook for copper in general, right?

The Oz Minerals share price has held firm this week despite the company reporting a 60% profit plunge in its half-year results on 26 August.

The post What’s the outlook for ASX 200 copper shares in September? appeared first on The Motley Fool Australia.

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More reading

• Why is the BHP share price tumbling again on Friday?
• Another tough day on the ASX; and BHP goes ex-dividend. Scott Phillips on Nine’s Late News
• Is the Rio Tinto share price a buy post-earnings season?
• 5 things to watch on the ASX 200 on Friday
• Rio Tinto share price dips despite $4.9b Turquoise Hill deal

Motley Fool contributor Bronwyn Allen has positions in BHP Billiton Limited and Macquarie Group 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 has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The James Hardie Industries Plc (ASX: JHX) share price is in the green today.

The global fibre cement company’s share price is currently trading at $33.68, a 1.42% gain. For perspective, the S&P/ASX 200 Index (ASX: XJO) is down 0.03% today.

Let’s take a look at why the James Hardie share price could be lifting today.

New CEO

Investors appear to be buying up James Hardie shares on news the company has hired a new CEO.

Aaron Erter will commence in the top job immediately and will be based in Chicago.

Erter joins James Hardie after a two-year stint with PLZ Corp, a North American aerosol and liquid product manufacturer.

Erter said he has “long admired James Hardie” and sees the new role as a “tremendous opportunity. He added:

I have been fortunate to work for some world-class organizations in my career, and I am confident that my experience and expertise align with what James Hardie needs in a leader.

He has an economics degree from the University of Pennsylvania and an MBA from the University of Notre Dame.

Deputy chairperson and chairperson elect Anne Lloyd said:

I am pleased to welcome Aaron to James Hardie as I transition into the Chairperson role in November. It is an energising period for the organization as we continue to drive profitable growth globally.

Jack Truong exited the company in January and appointed Harold Wiens as interim CEO. James Hardie is forecasting an adjusted net income of between US$730 and US$780 million in 2023.

James Hardie share price snapshot

The James Hardie share price has fallen 37% in the past twelve months and 39% in the year to date.

For perspective, the ASX 200 has lost nearly 9% in the past year.

James Hardie has a market capitalisation of $15 billion based on the current share price.

The post Why is the James Hardie share price having such a stellar end to the week? appeared first on The Motley Fool Australia.

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More reading

• James Hardie share price slides following guidance downgrade
• Buy this ASX share now before it reports this month: expert

Motley Fool contributor Monica O’Shea 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 Scott Phillips.

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The Dusk Group Ltd (ASX: DSK) share price is soaring on Friday.

This comes after the company released its full-year results for the 2022 financial year.

At the time of writing, the specialty retailer’s shares are up 8.60%, trading at $2.40.

Dusk share price surges despite profit, revenue fall

• Total revenue down 6.9% to $138.4 million
• Earnings before interest, tax, depreciation and amortisation (EBITDA) down 27.9% to $29.8 million
• Net profit after tax (NPAT) down 31.3% to $18.4 million
• Final dividend of 10 cents per share, fully franked
• Net cash of $21.3 million (no debt) as of 3 July 2022

What happened in FY 2022?

For the 53 weeks ended 3 July, Dusk delivered a solid result despite being heavily impacted in the first half due to COVID-19 government-mandated store closures.

While 5,483 store trading days (approximately 24%) were lost, the group still managed to achieve total sales of 138.4 million, down 6.9% on FY 2021.

Total like-for-like sales (LFL) dropped by 10.5%, cycling from the 32.7% surge experienced in the prior corresponding year.

On a positive note, online sales grew by 2.9% to $11.6 million, representing 8.3% of total sales. The company updated its web platform in August 2021 to be faster, more flexible and more engaging.

Furthermore, Dusk opened 10 new stores in Australia, which have been performing well to date. In total, Dusk now has 132 stores, including the online store.

Inventory stood at $15.4 million, a slight increase compared to the $14.4 million in FY 2021.

What did management say?

Dusk CEO and managing director Peter King had this to say about the results:

There is much to be pleased about in this result when considered in the context of the trading conditions seen in the year, especially in the first half where store closures reduced store trading days by approximately 24% and the Omicron variant reduced foot traffic over summer, including in the important Christmas trading season.

In FY22, we cycled exceptional LFL sales growth of +32.7% in the previous year. Although total and LFL sales were lower in FY22, we achieved strong results for Christmas and Mothers’ Day, and pleasing growth on a two-year basis (i.e. since FY20). Importantly, we feel we consolidated the step change in sales and earnings of the business compared to the pre-pandemic period.

What’s the outlook?

For the first eight weeks of FY 2023, Dusk noted that trading levels were stronger than the previous month of July.

Total sales are up 33.2% when compared to the first eight weeks in FY 2022. The company attributes this to having a full suite of new season merchandise available in-store and online.

Dusk stated that inventory was currently well balanced to meet demand, with orders placed well in advance for the peak Christmas period.

The company refrained from providing earnings guidance for FY 2023 given the continuing uncertain economic environment.

The Dusk share price is down 25% in 2022 after the company recorded heavy falls from April until June.

The post Dusk share price soars 9% on resilient full-year results appeared first on The Motley Fool Australia.

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More reading

• 2 ASX shares this fund manager thinks fits the bill for ‘undervalued growth’

Motley Fool contributor Aaron Teboneras 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 recommended Dusk Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The BHP Group Ltd (ASX: BHP) share price is currently down 1.8%, adding to yesterday’s fall.

Since the end of August, BHP shares have now fallen by around 10%.

Yesterday’s decline may have largely been due to BHP reaching the ex-dividend date. This simply means that new investors buying shares aren’t entitled to the final FY22 dividend.

In theory, BHP shares aren’t worth as much in the short-term if investors aren’t entitled to the large dividend.

However, that’s old news now.

Why is the BHP share price falling?

Well, you’d need to ask each individual seller why they’re selling today, at a lower price.

But, there could be a few different factors.

It’s certainly possible that a few more investors decided to sell their shares after the ex-dividend date.

But there could be other things happening.

The S&P/ASX 200 Index (ASX: XJO) is currently in the red by 0.25%, so BHP may be suffering from general market negativity, though BHP itself is responsible for a sizeable part of that decline considering BHP is such a large part of the overall ASX 200 index.

Iron ore price sinks

However, the thing that may be on investors’ minds the most is changing commodity prices.

As a resource business, BHP’s ability to generate profit is heavily dependent on the commodity price.

The costs of mining iron ore don’t really change whether the iron ore price is US$10 higher or US$10 lower per tonne. So, a higher price can largely add straight to the net profit after tax (NPAT) line (after paying the government a bit more). But the reverse is true when the iron ore price drops as well, which can hurt the BHP share price.

Commsec pointed out that overnight:

Iron ore futures slid US$8.37 or 8% to US$96.39 a tonne after the lockdown of Chengdu revived fears that the virus will continue to hamper China’s economic recovery.

An 8% fall in the iron ore price is a hefty fall in one day.

Lockdowns may not be permanent, but it does increase uncertainty for the market.

However, iron ore isn’t BHP’s only commodity – its portfolio includes other resources like copper, nickel and potash.

The company also recently tried to buy the ASX copper miner OZ Minerals Limited (ASX: OZL), but that was knocked back.

BHP share price snapshot

Over the last six months, BHP shares have dropped 24%.

The post Why is the BHP share price tumbling again on Friday? appeared first on The Motley Fool Australia.

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More reading

• Another tough day on the ASX; and BHP goes ex-dividend. Scott Phillips on Nine’s Late News
• Why BHP, Deep Yellow, Nickel Industries, and PointsBet shares are dropping
• Why is the ASX 200 diving 2% on Tuesday?
• How did ASX 200 dividend shares stack up in August?
• Reason for hope as ‘worst month of the year’ starts off badly

Motley Fool contributor Tristan Harrison 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 Scott Phillips.

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The Telstra Corporation Ltd (ASX: TLS) share price managed to beat the performance of the S&P/ASX 200 Index (ASX: XJO) in August.

Looking at the numbers, Telstra shares went up by 2% while the ASX 200 only went up by 0.6%.

A lot of businesses reported during August 2022, including Telstra. Investors got a good insight into how the telco performed over the prior twelve months. We got a view of how things are turning around and Telstra also revealed an exciting development for shareholders.

Telstra FY22 earnings recap

The telco giant said that its total income fell 4.7% to $22 billion and the underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) increased by 8.4% to $7.3 billion. The underlying earnings per share (EPS) jumped 48.5% to 14.4 cents.

Management said that the mobiles division performed “very strongly”, with EBITDA growth of 21.2%. The postpaid handheld average revenue per user (ARPU) grew by 2.9% and mobile services revenue rose by 6.4%. The company added 155,000 net retail handheld services.

The company revealed that Telstra Health is on track to become a $500 million revenue business by FY25. Telstra Health FY22 revenue jumped 51% to $243 million after including the acquisitions of MedicalDirector and Power Health.

Telstra Health was also selected by the government to run the 1800RESPECT service. This division could have a growing influence on the Telstra share price in the coming years.

Perhaps two of the most important numbers in the result showed growth. The free cash flow increased by 5.9% to $4 billion. Telstra also increased its dividend for the first time in seven years. The board decided to increase the half-yearly dividend by 6.25% to 8.5 cents per share.

The outgoing boss of Telstra, Andy Penn, said this about the dividend increase:

This represents the first increase in the total Telstra dividend since 2015 and recognises the confidence of the board following the success of our T22 strategy, the ambition in our T25 strategy of high-teens EPS growth from FY21 to FY25, the strength of our balance sheet and the recognition by the board of the importance of the dividend to shareholders.

Dividend growth may be very important for some investors looking at the Telstra share price.

Telstra is expecting growth in the next few years as it rolls out 5G to locations and customers.

The telco is looking to generate attractive profit growth by cutting costs and also growing revenue. Telstra recently implemented price rises for many postpaid customers – this could help revenue and profit.

Are brokers optimistic about the Telstra share price?

The broker Morgans liked the FY22 numbers and is expecting profit growth in FY23 and then in FY24. It’s expecting the elevated dividend payment to continue from here. Morgans has a price target of $4.60 on Telstra, implying a mid-teen rise for Telstra shares.

Ord Minnett also rates Telstra as a buy, with a price target of $4.60. It likes Telstra’s strong positioning as the leader in mobile, and 5G is expected to help Telstra. It’s expecting profit and dividend growth in the coming years.

The post Why did the Telstra share price outperform the ASX 200 in August? appeared first on The Motley Fool Australia.

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More reading

• Why did the Telstra share price beat the ASX 200 today?
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• Telstra shares offer a dividend yield over 4% right now. Is this as good as it sounds?
• Here are the 3 most heavily traded ASX 200 shares on Monday
• How much income will Telstra shares pay for FY22 after this month’s dividend hike?

Motley Fool contributor Tristan Harrison 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 positions in 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 Scott Phillips.

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