Telstra Corporation Ltd (ASX: TLS) shares should be on all investors' watchlists.
As Australia's largest telecommunications company, Telstra is afforded unique characteristics which make it one of the most appealing blue chip stocks on the ASX.
For example, it dominates every market it operates in, has decades-old legacy assets which continue to provide a recurring revenue stream, and its long-term outlook is excellent.
After more than doubling in price over the past five years, Telstra shares aren't the great buy they once were. But that doesn't make them a sell either!
Here are three reasons why Telstra shares need to be on your watchlist…
- Dividends. Telstra pays one of the most reliable dividends on the ASX. In 2016, analysts are forecasting the telco to pay a dividend equivalent to 4.96% fully franked (7.08% grossed-up).
- Asia. Under the leadership of former CEO, David Thodey, Telstra started on its journey to generate one-third of group revenues from Asia by 2020. Leveraging off its local success, if Telstra can achieve its goal further share price gains could be on their way.
- Valuation. Telstra shares currently trade at a hefty price-earnings multiple of around 18x. However, as I showed here, its shares are not drastically overpriced. My estimates place fair value for Telstra shares around $6.11. Currently trading at $6.07, if Telstra shares suffer any meaningful selloff in price, investors should be ready and waiting to scoop up some shares for their portfolio.
Telstra has a lot of traits which make it an appealing long-term investment prospect.
However, whilst investors could do far worse than add it to their portfolios for income today, I suggest you hold off buying any new shares for now and wait for a more compelling entry point.
So, Telstra's out. This ASX dividend stock is in…
