There's a lot to like about owning shares in Australia's largest telecommunications company, Telstra Corporation Ltd (ASX: TLS).
Here's why I'm watching Telstra shares closely, and why I think you should too.
Multiple exciting Futures.
Telstra has an exciting future in Australia's increasing use of technology and internet enabled devices. Telstra is not only the largest mobile and broadband network operator in the country, it's also the biggest investor in eHealth technologies and is pushing rapidly into the huge but growing machine-to-machine (M2M) market. M2M refers to the ability of devices to 'talk' to each other.
Telstra's Asian growth strategy presents another exciting future for the company. In addition, in the near term, Telstra's set to receive a cash windfall from the government's NBN Co for its 100-year-old copper cable network that will be used for further expansion locally and abroad.
BIG dividends.
Telstra is renowned for its dividends, having paid its 28 cents per share annual distribution every year from 2004 till 2014, before increasing the payout to its current level of 30.5 cents per share. With no end in sight, Telstra could be a great addition to portfolios for those investors chasing income.
Valuation is becoming more compelling.
Telstra shares have fallen 2.2% since the beginning of the week following a soft profit outlook announcement at the company's Annual General Meeting yesterday. However, previously I've said Telstra shares would be a good buy at they near $5 per share. Currently $5.52, Telstra's share price is down from a high of $6.74 earlier this year.
Buy, Hold or Sell?
As noted above, I'll be a buyer of Telstra shares when they near $5. In the meantime, investors might also consider shares of TPG Telecom Ltd (ASX: TPM) and M2 Group Ltd (ASX: MTU) as viable alternatives in the local telecommunications space.
