Telstra Corporation Ltd (ASX: TLS) is a household name amongst customers and investors alike. With superior networks and 12.4 billion shares on offer, it's little wonder most Australians have it in their long-term portfolio. It seems to be a matter of how much should you hold, rather than should you hold it at all.
1. Safety
The first reason investors are continuing to buy shares in Telstra is due to its perceived level of safety. And rightly so. Its domination in both mobile and fixed internet markets affords it extremely lucrative margins and high levels of cash flow which are unlikely to be undone in even the worst recession, nor is it likely to disappear in the next 10 years.
2. Income
With margins that even the supermarket giants Coles – owned by Wesfarmers Ltd (ASX: WES) and Woolworths Limited (ASX: WOW) would be jealous of, it's little wonder Telstra has the ability to pay such a large dividend. In FY13 the dividend payout was 28 cents per share but, thanks to a half cent increase in the interim dividend, it is anticipated its board will declare another 14.5 cent dividend later in the year, taking the total to 29 cents fully franked. Giving it a forecast yield of 5.64%.
3. Growth
Despite its dominance, Telstra is not void of some solid growth prospects. Although it's Sensis business has failed (unsurprisingly) to compete with the likes of Google. Telstra's management has positioned the company to benefit from the ongoing demand for cloud computing, unified communications and networked services. In the first half of FY14 both the Network Application Services (NAS) and International divisions notched-up revenue growth of just shy of 30%. Although they account for around 15% of group revenue combined, they'll be significant contributors to earnings growth in the next 10 years.
Foolish takeaway
Not many companies in the S&P/ASX200 Index (ASX: XJO) (^AXJO) offer safety – thanks to industry tailwinds and a monopoly-like dominance, superior income and solid growth prospects like Telstra does. At current prices Telstra is deserving of a spot in almost any portfolio. The only question is how much should you buy.