Although it was a bumpy start to the year for Telstra Corporation Ltd (ASX: TLS), it looks as though the stock is now well and truly back on track.
While the shares briefly fell below $5 in March, they have since climbed to a multi-year high of $5.40 and have thus delivered shareholders with a stunning 94% return since the beginning of 2011 (and that's not even including dividends).
The good news is, I believe there is still plenty of room left for them to run much, much higher. Here are three reasons to buy Telstra even at today's valuation…
- Telstra's fully franked dividend is one of the stock's most appealing attributes. Shares are trading on a trailing dividend yield of 5.3% which is far better than those offered by other companies like Commonwealth Bank of Australia (ASX: CBA) or Woolworths Limited (ASX: WOW).
- Although Telstra's CEO David Thodey has admitted mobile growth will slow down in the near future, the telco continues to attract customers from rivals like Optus, owned by Singapore Telecommunications Limited (ASX: SGT), and Vodafone, partly-owned by Hutchison Telecommunications (Australia) Limited (ASX: HTA). Its new plan to rollout one of the world's largest wireless networks would likely lead to even more customers making the change.
- Thodey has also stated his company is looking at acquisitions in Asia with the aim of having around one-third of its revenues coming from Asian businesses by 2020. Although expanding overseas introduces new risks, it also opens up a world of opportunities (quite literally) and could help Telstra significantly boost profit growth.
An even better bet than Telstra
Telstra is a solid investment prospect and, despite its size, still has a long pathway of exciting opportunities ahead. Alternatively, there is another, much smaller company, which is also set to deliver massive gains in the long-term.
