Telstra Corporation Ltd (ASX: TLS) and Woolworths Limited (ASX: WOW) are stalwarts of the Australian share market.

But which is right for your portfolio today? Let’s take a brief look at each to see which is the better buy today.

Telstra

Telstra has deserved its title as one of the best defensive income investments on the ASX. The $69 billion telecommunications heavyweight is a leader in fixed broadband, mobiles, network applications and other legacy services.

At the shareholder level, Telstra’s share price has risen an impressive 80% in five years and not once has it lowered its dividend payment. Telstra is expected to pay a 31 cents per share dividend, equivalent to a yield of 5.7% fully franked, in the next 12 months.

The key risks facing Telstra are competition and technological disruption. Usage of internet-based services like instant messaging and VoIP have leapt ahead of voice and SMS in popularity. The shift away from fixed line networks (like the NBN) is already well underway. While Telstra has the premier mobile network now, there’s no guarantee it’ll retain its leadership position for another decade.

Woolworths

Woolworths knows too well the effect of competition. A resurgent Coles, owned by Wesfarmers Ltd  (ASX: WES), and Aldi have upped the ante on Australia’s largest groceries business. Unfortunately, Woolworths’ attempt to expand into other areas of retailing proved challenging.

Nonetheless, the company has some appealing characteristics. For example, in the year ahead, Woolworths’ shareholders are expected to receive a cash payment equivalent to 4% fully franked.

Given its decision to divest Masters and Home Timber and Hardware, and the loss expected from Big W, Woolworths’ profit growth now relies solely on the supermarkets business. Unfortunately, with grocery margins expected to narrow, shareholders may be in for a rocky ride.

Better buy: Telstra or Woolworths?

Telstra shares appear to trade at a premium valuation to the market, or S&P/ASX 200 (Index: ^AXJO) (ASX: XJO), while Woolworths’ shares are cheaper. So it appears to be a classical case of ‘you pay for what you get’.

However, while Telstra shares seem to be a better long-term investment, it’s not a buy above $5, in my opinion. Its shares would have to drop meaningfully below $5 to be a standout buy.

Forget companies cutting dividends like Woolworths when you can get GROWING dividends.

This "dirt cheap" company is growing like gangbusters, and trading on a fat dividend yield, FULLY FRANKED. With interest rates set to stay at these low levels for years to come, for income-hungry investors, including SMSFs, this ASX company could be the "Holy Grail" of dividend plays for 2016. Click here to gain access to this comprehensive FREE investment report, including the name of this fast growing ASX dividend share. No credit card required.

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!

Simply enter your email now to receive your copy of our brand-new FREE report, “The Motley Fool’s Top Dividend Stock for 2017.”

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our https://www.fool.com.au/financial-services-guide">Financial Services Guide (FSG) for more information.

Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any company mentioned in this article. You can follow Owen on Twitter @ASXinvest.

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.