3 reasons to hold Telstra Corporation Ltd shares

At one point or another, we have to call a spade a spade and suggest a company’s shares are no longer a firm ‘Buy’.

Over the past three years shares in Telstra Corporation Ltd (ASX: TLS) have returned over 100% to investors and now sit at $5.45 per share. It’s a high not seen in more than 12 years.

In recent times, I’ve been exceedingly bullish on Telstra partly because it was only a matter of time before falling interest rates increased demand for the telco’s dividend.

However, I feel the stock is now moving out of the ‘buy zone’.

Whilst I have previously said I wouldn’t be surprised if its share price reaches $6.00 in coming months, I believe investors could find better value in other dividend stocks available on the market (more on that below).

However, I believe Telstra is not a ‘Sell’ either. Here’s why:

1. Dividends are in vogue. With a forecast 5.3% fully franked dividend yield, shareholders will be hard pressed to find a similar yield from term-deposits or bonds. What’s more, it’s likely to increase its payout in coming years.

2. Asia is a key growth market for Telstra. While risks persist, CEO David Thodey has a goal of deriving one third of revenues from Asian markets by 2020. Given the telco’s track record in the region, I remain confident it can execute the strategy.

3. The government’s own NBN Co is expected to pay Telstra up to $98 billion in compensation for its relinquishment of its extensive copper cable network. Who wouldn’t want to get paid top dollar for outdated infrastructure?

An even better dividend idea than Telstra – FREE!

As noted above, I believe Telstra is now a ‘Hold’ but is, by no means, a ‘Sell’. However there’s plenty of other high-yielding dividend stocks on the ASX available today, at great prices.

For example, I'm considering buying one growing ASX stock with a 7% grossed-up dividend which trades cheap! Our top analyst recently dubbed it, "The Motley Fool's Top Dividend Stock For 2014 - 2015" but, BEST of all, you can get the name and code of this ultra-promising stock for FREE! 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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