Since November 2011, shares in Telstra Corporation Ltd (ASX: TLS) have appreciated over 77%, not including dividends. Coincidentally, November 2011 was the first month the Reserve Bank of Australia (RBA) began lowering official interest rates.
With an initial investment in Telstra returning in excess of 100% (including dividends), compared to a return of just 29% from the S&P/ASX 200 (INDEXASX: XJO), it's easy to see why some investors refer to the telco as an alternative to bond markets.
In that time Telstra has done more than simply pay out a generous fully franked dividend. Management, led by CEO David Thodey, has made a number of asset sales and continued to increase the company's mobile market share and grown the International and Network Application Services (NAS) divisions excellently.
However since 2011 (remember its share price has climbed over 77%), earnings per share have grown by less than 5% and sales revenues are up just 0.05%.
Buy, Hold, or Sell?
Some shareholders are likely thinking now is a good time to reduce their holding in Telstra, or even remove it from their portfolios altogether. In my opinion if your happy to receive a regular fully franked dividend and can honestly see yourself holding the stock through a market cycle then holding onto your shares makes sense. Telstra will continue to grow steadily long into the future and being a dominant blue-chip business which deals in non-discretionary items, it is afforded enviable cash flows. This gives it the ability to invest in growth areas (like Asia) and continue to pay a generous dividend.
