Over the past year, Telstra Corporation Ltd (ASX: TLS) is one of just a few prominent Australian blue chip companies to have significantly outperformed the S&P/ASX 200 (ASX: XJO) (INDEX: ^AXJO).
Meanwhile most of the big banks, including Australia and New Zealand Banking Group (ASX: ANZ), have failed to outperform the benchmark (excluding dividends).
There have also been some losers, such as the two big miners and Woolworths Limited (ASX: WOW). The grocer's share price is down nearly 7% for the year.
Given the lacklustre performance of many blue chips, investors are likely questioning whether now is, or isn't, the right time to buy these dividend darlings. Here's what you need to know.
Woolworths
In recent times the supermarket giant has been able to throw its weight around and drive its own profit margins higher, at the expense of suppliers. However it now appears to be facing big challenges of its own.
Indeed in the grocery channel, competition from foreign rivals such as Aldi and Costco is beginning to concern investors, whilst fears of the stock going 'ex-growth' are also creeping in.
The recent selloff in Woolies shares has however created an opportunity for both shrewd value investors and those chasing income.
ANZ Banking Group
ANZ is Australia's third largest bank by market capitalisation and the one most actively seeking growth in Asian markets. Since CEO Mike Smith launched the bank's Super Regional Strategy in 2007, revenues from key foreign growth markets have swelled to around 24% of the group's total.
With the obvious growth potential of Asian markets, coupled with excellent profitability in both Australia and New Zealand, ANZ shares don't come cheap. Whilst its price-earnings (P/E) ratio of 12 may appear great value when compared to the ASX's average of 15, bank earnings are cyclical and investors taking a long-term view must buy bank shares at times when earnings are depressed and economic uncertainty looms. That is not today.
Telstra
Following a spectacular share price rise last year, Telstra was able to rally above its previous 13.5-year high of $6.19 just a few weeks ago.
Whilst its rise in 2014 may have been justified on the back of its strong performance in Asia, lucrative negotiations with the government's NBN Co and sweeping divestments of underperforming assets; its share price now looks quite demanding. At $6.39 per share the $77 billion company appears fully valued.
Therefore investors should wait for a meaningful pullback in price before hitting the buy button.
