Telstra looks like a great buy
I know I’ve said Telstra looks great before, that’s called consistency.
Over the last few years I’ve bought and sold Telstra and bought again. I now have my largest holding of Telstra, with an average cost price higher than the current price. I’ve held some Telstra shares for a while, collecting excellent dividends. This is not a recommendation, as always do you own diligence.
The AFR said today
” Telstra’s rivals will launch a co-ordinated lobbying campaign today, aimed at forcing the former telephone monopoly to separate its retail and wholesale divisions and divest itself of its cable network and 50 per cent stake in Foxtel.”
Great, separating the divisions would like more likely create more focused companies with executives more incentivised to succeed. With less government and regulatory interference to boot.
If you doubt my logic, then lets try another tact
Wholesale – who cares, pay me for it and leave me with the growth retail division. Or leave Telstra as one, then I can use the cash cow wholesale to fuel growth in faster growing divisions. I win either way and none of this really matters anyway. It’s the brand. Telstra is Australia’s best known brand and it will the major player in Australian telecommunications for the foreseeable future.
Telstra will continue paying an excellent dividend, while owners wait with a high probability of selling at higher prices.
There’s a probable catalyst within two months. If the NBN doesn’t work out there’s still plenty of scope for any other good news to send the shares higher. The Telstra share price reflects the worst outcome .
The big reasons is the fat dividend which this article summarising the benefits of. Another good article on dividends by the same guy.
So big dividend, low downside risk, good probable capital returns with at least a 3:1 reward/risk profile, for Australia’s best known brand with possible catalysts on the horizon.
Teltsra dividends since 1998. The dividend has been steady for four years, with two bonus dividends passed out in ‘05-06. Prior to that it grew from $0.07 a half to the current $0.14 twice yearly dividend.
News Articles
via Business Spectator
“Telstra Corporation Ltd has been ranked Australia’s strongest brand by a leading brand consultancy.
Interbrand valued the Telstra brand at $9.7 billion, followed by Commonwealth Bank of Australia Ltd at $7.1 billion and National Australia Bank Ltd at $5.1 billion.
Westpac came in at number four with a value of $4.8 billion, while ANZ Banking Group Ltd lagged slightly behind its main rivals, coming in at number seven with a brand value of $3.1 billion.
Interbrand said Telstra was ranked highest because of its the only telco with “a truly integrated telecommunications experience”, while Commonwealth Bank of Australia beat off its rivals because it has “achieved success through its consistency in cross selling and delivering the types of products customers want across a range of categories”.”
Selling Telstra again
“However, last year the brand failed to make the top 20 in the Principals/Synovate Authentic Brand Index, a highly regarded reputational study. In fact Telstra was among the top 10 companies whose rating on the index declined the most. At the same time, BigPond, thanks perhaps to its rabbits, achieved the third biggest jump in its rating, marginally below that of Telstra. And with Trujillo and Telstra chairman Don McGauchie constantly under siege in the media, some leading marketing and branding people now argue the telco’s brand has reached a critical juncture. ”
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