On a tough day for the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO), where banks and miners fell, despite bumper profit figures from Australia and New Zealand Banking Group (ASX: ANZ) even shares in dividend-paying darling Telstra Corporation Ltd (ASX: TLS) lost ground, falling 2 cents to $5.20.
Despite that modest fall, the shares still trade close to their 52-week high of $5.30, and are up almost 20% since the beginning of 2013.
Here are three reasons for investors to stick with Telstra…
1) The legendary fully franked dividend. In February, Telstra announced market beating results, and an increased interim dividend of 14.5 cents — the first change to the telco’s payout in eight years. The shares today trade on a trailing dividend yield of a very respectable 5.5%, beating the pants off the returns available on term deposits.
2) Scale. There are now no less than 15.8 million individual Telstra mobile customers across Australia, helping the company to a 9.7% increase in profits in the last six months. The company plans to grow its superior 4G network to 85% of the population by Christmas, thanks to upgrades at 1,500 base stations throughout the country. That’s some competitive advantage.
3) Growth. In the six months to 31 December 2013, Telstra group revenue increased 4.1% to $12.6 billion, whilst net profit jumped 9.7% to $1.7 billion. This is more than yield story, the company’s Network Application Services (NAS) being the standout performer, with revenue up 29.3%. The division includes Cloud (up 28.6%), Unified Communications (up 27.6%) and Managed Network Services (up 64.8%).
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Bruce Jackson has an interest in Telstra
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