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Should you buy Telstra Corporation Ltd?

This morning shares in Telstra Corporation Ltd (ASX: TLS) have opened higher, $5.33 at time of writing, punching through its previous 52-week high of $5.27 in mid-February.

Perhaps investors were encouraged by news the company plans to build a Wi-Fi network which will span the country, or the realisation that low interest rates could be here to stay for at least a little while longer.

However with Telstra kicking goals in every direction, it just might be possible for it to go even higher in coming years. Although investors could have been positively surprised by news it intends to grow its nationwide Wi-Fi network, they shouldn’t have been.

Telstra has, for as long as I can remember, been Australia’s dominant telecommunications company in every aspect of its business (Ok, maybe not in customer service – although it has significantly improved in recent years). From its fast and reliable 4G mobile network, fixed phone and internet connections to its market leading Foxtel pay-tv business, Telstra has proven it’s got what it takes to be one step ahead of the competition.

Moving out from the shadow of its former government self, Telstra has not only taken advantage of its monopoly-like dominance in the Australian market but also extended its reach in Asia. With key partnerships in a number of potentially lucrative markets such as Indonesia and China, Telstra is leveraging from its local success and going abroad. Shareholders couldn’t be happier, especially since the International business continues to grow revenues at double digit rates.

Thanks to its forecast free cash flow of $5 billion, the divestment of a large stake in Sensis and the recent sale of its Hong Kong mobiles business, CSL, Telstra is cashed up and able to increase dividends or make further investments throughout Asia, if it chooses. Already yielding 5.4%, it’s easy to see why income investors love the stock so much.

Does Telstra deserve your money?

With a huge cash pile, increasing dividends and growth opportunities locally and overseas, Telstra could easily go higher than $5.33 per share.

However, believe it or not, it's still not our favourite dividend stock for 2014! Get The Motley Fool's #1 pick now in our newly updated investment report. It's yours FREE. Simply click here for your copy of "The Motley Fool's Top Stock for 2014."

Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies. 

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