These 3 telecoms all beat Telstra

The ‘chase for yield’ as it has been termed has seen many investors pile into Telstra  (ASX: TLS) and the major banks with the aim of securing a solid dividend yield. While this is understandable given the low interest rates on offer with a bank deposit, it has the potential to blind investors to the outstanding opportunities to purchase companies with strong growth potential.

Last financial year, the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) rallied around 17%. In comparison Telstra shot up about 30%, which was certainly great outperformance and of course there was the juicy Telstra dividend too. Investors who looked past Telstra however could have earned significantly more capital gains and still received respectable dividends had they investigated some of Telstra’s smaller and more nimble competitors.

TPG Telecom (ASX: TPM), which is particularly active in the ISP market continues to grow its market share. TPG saw its share price rally from around $1.70 to $3.50 over the 12-month period, which provided shareholders with an outstanding return of 106%.

iiNet (ASX: IIN) which has grown beyond its original Perth base also focusses on the ISP market. It ran a very close second to TPG in terms of share price growth with iiNet surging from just over $3.00 to $6.20, providing shareholders with 104% returns.

M2 Telecommunications Group (ASX: MTU) started last financial year at $3.30 and finished the year at $5.85, a return of 77%. M2 has undertaken a number of recent acquisitions, including the iPrimus and Dodo businesses, which have set the stage for further earnings growth in coming years.

Foolish takeaway

Most investors would rather a return of 106%, 103% or even 77% over 30%, however many investors may currently be blinded to the potential capital gains of growth stocks by their fixation of dividend yields.

Savvy investors are now seeking growth in smaller companies. Discover two stellar small-cap opportunities now, in our brand-new research report, “2 Small Cap Superstars” — simply click here to download your FREE copy.

More reading

Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

Top 3 ASX Blue Chips To Buy For 2019

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked…

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of The Motley Fool’s Top 3 Blue Chip Stocks for 2019.

Each one pays a fully franked dividend. The names of these Top 3 ASX Blue Chips are included in a specially prepared FREE report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

See the 3 blue chip stocks

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

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 Financial Services Guide (FSG) for more information.