Rising over 44% in the past 24 months, some investors are perhaps sceptical of Telstra Corporation Ltd's (ASX: TLS) ability to send its share price higher in the future. However there are a number of potential catalysts which could send shares higher in both near and long terms.
The first of which is Telstra's growing dividend. With a yield of 5.4% fully franked, investors who choose to buy now are locking themselves in for consistent dividend payments well into the future. Although its full-year dividend is expected to grow only modestly to 29 cents per share, in the next few years brokers and analysts are expecting both earnings and dividends per share to increase.
Part of the reason many investors believe Telstra will continue to pay a robust and market-leading dividend is put down to its huge cash flow and, as its been called in the media recently, its "war-chest". This is believed to hold anywhere between $5 billion and $7 billion following the divestments of both its CSL mobiles and Sensis businesses.
The huge cash pile has led to speculation of increased dividends in the near-term, other capital management incentives like share buy-backs or debt repayments and, possibly, acquisitions. I believe it won't go above and beyond its forecast 29 cents per share full-year dividend payment, but will instead look to continue growing its presence in Asia.
Both International and Network Application Services (NAS) divisions are showing excellent signs of growth and will be the most likely catalyst for a higher share price. The International division includes key assets such as a majority holding in Autohome Inc (NYSE: ATHM) and key foreign partnerships and contracts. The NAS division provides cloud computing, unified communications and managed networks for defence and big business, each of these areas are growing rapidly.
Foolish takeaway
There are a number of ways Telstra shares can go higher in the near-term and long-term. Unlike other big blue-chips such as Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC), Telstra has clear long-term growth prospects and pays an equally rewarding dividend.
