If you?re looking for big blue chip, dividend-paying ASX technology shares, Telstra Corporation Ltd (ASX: TLS), Carsales.Com Ltd (ASX: CAR) and REA Group Limited (ASX: REA) are worthy of a spot on your watch list in 2016.
Telstra?s price has fallen around 15% in six months, largely in line with the broader S&P/ASX 200 (Index: ^AXJO) (ASX: XJO), and, therefore, its share price has become more compelling. While the bulk of Telstra?s valuation comes from the telecommunications side of its business, it is also pushing rapidly into eHealth, networked applications and other nimbler technology businesses.
Telstra?s current share price of…
If you’re looking for big blue chip, dividend-paying ASX technology shares, Telstra Corporation Ltd (ASX: TLS), Carsales.Com Ltd (ASX: CAR) and REA Group Limited (ASX: REA) are worthy of a spot on your watch list in 2016.
Telstra’s price has fallen around 15% in six months, largely in line with the broader S&P/ASX 200 (Index: ^AXJO) (ASX: XJO), and, therefore, its share price has become more compelling. While the bulk of Telstra’s valuation comes from the telecommunications side of its business, it is also pushing rapidly into eHealth, networked applications and other nimbler technology businesses.
Telstra’s current share price of $5.40 equates to a price-earnings ratio of 15x and dividend yield of around 5.8% fully franked. That appears a fair valuation for the business. However, if the Telstra share price falls below $5, I think it’d make a compelling entry point for long-term investors.
Carsales is Australia’s leading automotive listing portal owner but is not a one-trick pony. In addition to its very profitable local business, Carsales has strategic stakes in a few international businesses. For example, Carsales’ stake in iCar Asia Ltd (ASX: CAR) affords it diversification across ASEAN markets together with another revenue source for long-term growth.
At its current share price of $11.34, Carsales trades on a price-earnings ratio of 26x and dividend yield of 3% fully franked. Despite its seemingly high P/E, however, Carsales could be a buy for those investors focused on the ultra-long term. Any price below $10 would be a decent entry point into the shares, in my opinion.
REA Group is another dominant Australian listing site which tried its hand in overseas markets. However, the company has been unable to emulate its local success in international markets, particularly the USA. Nonetheless, the owner of realestate.com.au is still an intensely profitable business, with a commanding lead over its second place rival, Domain.
After falling below $40 in June 2015 (a good buying price, in my opinion) the REA Group share price has climbed back above $51 and now commands a high valuation. Given its long-term potential and forecast dividend yield of 1.8% fully franked, I think REA Group is a hold at today’s prices.
Want our BEST technology stock idea?
Our expert analysts recently hand-picked their top technology stock idea for 2016. And it's easy to see why: It has a big dividend yield, is growing rapidly and has heaps of cash on its balance sheet. Best of all: their top stock pick of 2016 is yours free! Just click here, enter your email address, and we'll send you their research report. No credit card details or payment required.
Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
HOT OFF THE PRESSES: Motley Fool’s #1 Dividend Pick for 2017!
With its shares up 155% in just the last five years, this ‘under the radar’ consumer favourite is both a hot growth stock AND our expert’s #1 dividend pick for 2017. Now we’re pulling back the curtain for you... And all you have to do to discover the name, code and a full analysis is enter your email below!