Shares of Telstra Corporation Ltd (ASX: TLS) rallied more than 2% today, to a high of $6.26.
Along with the broader S&P/ASX 200 (ASX: XJO) (Index: ^AXJO), Telstra's share price has been volatile in recent months. Investors have reacted to its frothy valuation, and Eurozone concerns, by selling the stock down around 2% over the past three months.
However, Telstra continues to present as a compelling investment in the current low-interest rate environment. Armed with a forecast 4.9% fully franked dividend, Telstra grossed-up yield of 7% compares favourably to the 2.5-3% currently on offer from term deposits and savings accounts.
While Telstra shares are undoubtedly riskier than term deposits, there is the potential you could make healthy capital gains over the long term. While historical performance does not guarantee future performance, Telstra's share price has doubled over the past five years.
Should you buy?
Investors choosing to buy Telstra shares today would not be getting a bargain. However, if you have a view to the long term, then there could be value in the company today. As I recently showed here, Telstra shares are likely worth anywhere between $6 and $6.50.
