Telstra Corporation Ltd (ASX: TLS) shares are nearing the buy zone.
Down 12% in just six months, Telstra shares are arguably priced for long-term investors at today's price of $5.55.
Indeed, although I previously said I'd buy Telstra at $5 per share, there are many reasons to think now could present a worthwhile point to enter the stock. In light of today's Investor Day presentations, here are three of my favourite reasons to consider owning Telstra shares:
- Valuation is becoming more compelling. Telstra currently boasts a forward price-earnings ratio of 16x and trades below consensus fair value of $5.94, according to analysts polled by The Wall Street Journal.
- It's still one of the ASX's best dividend stocks. Telstra is forecast to pay a dividend equivalent to 5.7% fully franked in the coming 12 months. Grossed-up for franking credits that's an impressive 8.1% — try getting that from the bank!
- Long-term growth. At today's Investor Day, Telstra CEO Andy Penn said one of the group's priorities was to, "continue to invest in long term growth." A rapidly expanding national WiFi network, divestments of non-core assets, Asian growth strategy and the increasing pervasiveness of smart devices afford Telstra excellent long-term growth potential.
Buy, Hold or Sell?
If Telstra continues to trend towards $5 per share, I'll start loading up on shares. Its defensive revenues offer shareholders a stable dividend and the ability to invest for the long term. With a new CEO at its helm, I'm excited to see what the future brings…
…now I just need the shares to drop in price.
