Should you SELL your Telstra Corporation Ltd shares?

Did you know shares in Telstra Corporation Ltd (ASX: TLS) are currently sitting at a 10-year high?

For astute long-term investors, this is when the light-bulb flickers on and we start to say to ourselves, “Should I sell?”

This is a healthy question any stockmarket investor should ask themselves regularly because you’ve only truly made money on the stockmarket once your investment dollars are tucked safely away in a savings account.

We face a trade off…

If we sell now and shares climb higher we’ll kick ourselves for missing the opportunity, but if they drift sideways or fall, we’ll give ourselves a pat on the back.

Fortunately however, we’re not the only ones who cannot predict the future.

Therefore the best thing current shareholders or potential investors can do right now is objectively value the company’s future prospects and discount it back to its current share price.

For potential investors I’ve previously noted I would not pay more than $5.50 for Telstra shares. Although I don’t usually anchor on share prices one must draw a line in the sand somewhere.

However, although I believe Telstra shares are not a bargain at current prices, that doesn’t make them a ‘Sell’ either! Therefore long-term shareholders who bought in at much lower prices, say below $4.00 per share, need to consider what they want from their investments.

As we know Telstra pays an excellent dividend yield, which is somewhat akin to an income oasis in the current low interest rate environment. So if you want a stable fully franked income stock which you intend to keep for more than five years, I believe Telstra is a ‘Hold’ at current prices.

For new money entering the market however, with the stock near $5.50, I do not believe Telstra’s share price will significantly outperform the S&P/ASX 200 Index (ASX: XJO) (INDEX: ^AXJO) over the next five years. Therefore I’d look for other big dividend stocks with more growth potential.

If you’ve read this far, chances are, you’re like me and constantly on the lookout for top dividend stocks to buy in the low interest rate environment…

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…And while blue-chip stocks such as Woolworths Limited (ASX: WOW), Telstra and Commonwealth Bank of Australia (ASX: CBA) are renowned for their generous dividends, they’re not cheap! What’s more, given their sheer size, it’s hard for them to grow rapidly.

That's why we're focused on finding small-cap stocks with BIG dividend yields and real growth potential. For example, every year, Motley Fool investment advisor Scott Phillips hand-picks 1 ASX dividend stock with outstanding potential. Just click here to download your free copy of "The Motley Fool's Top Dividend Stock for 2014-2015" today.

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

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