Is it time to SELL your Telstra Corporation Ltd shares?

Long-term investors could find value in holding this telco giant.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares in Telstra Corporation Ltd (ASX: TLS) have performed exceptionally well in the past three years. If you included dividends, your total shareholder return would be near 100% – a heck of a performance by all investors’ standards. It has far outperformed other popular blue chips such as BHP Billiton Limited (ASX: BHP), Woolworths Limited (ASX: WOW) and the broader S&P/ASX 200 (ASX: XJO) (INDEX: ^AXJO).

So now, justifiably, some of you who bought Telstra shares in recent years would seriously be considering selling to pocket a tidy profit. And fair enough, you deserve the rewards. But my question to you is: What would you do with the money?

From personal experience I know how tempting it can be to sell a blue-chip stock when it has performed exceptionally well. I bought Telstra shares in 2012 and sold in 2013 for a “tidy” profit only to watch them rise a further 50 cents and pay another 42 cents in fully franked dividends. Meanwhile I, undesirably, copped capital gains tax on all my gains.

The lesson I’ve taken away from this is quite simple. If you don’t need the money and you’ve found yourself a growing stock which pays out handsome dividends, why sell? Even if Telstra shares fell by 30% this week, it’d still be above the amount I sold my shares for, once you include dividends paid and my capital gains tax liability.

But if you’re still concerned, consider what Telstra has to offer…

Even at current prices it has the hallmarks of a great buy and hold investment because it has the best return on equity of any Australian blue-chip stock (with a market capitalisation greater than $35 billion), and the third-highest dividend yield. What’s more, it has a number of promising growth strategies, rising cash flows and very strong macroeconomic tailwinds.

Although it dominates the local mobile, fixed internet and pay-tv markets, Telstra’s International and Network Application Services divisions continue to grow rapidly, providing the possibility of long-term earnings per share growth.

Telstra: Buy, hold or sell?

If you already hold Telstra shares, I feel there’s good reason to keep holding them, especially given that the returns offered from term deposits and savings accounts are very poor. In addition for would-be long-term investors, there could be value to be had at Telstra’s current price, with the likelihood of greater earnings and dividends in coming years.

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

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

asx share price competitions represented by businessmen arm wrestling
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

person reading news on mobile phone
⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »