Is the Telstra Corporation Ltd share price a GREAT buy?

The Telstra Corporation Ltd (ASX:TLS) share price appears very compelling.

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The Telstra Corporation Ltd (ASX: TLS) share price quietly continued its merry way towards a better value price on Friday.

Indeed, against a backdrop of a falling S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) shares of Australia's largest telecommunications carrier have continued to slip from $6.50 in August to $5.40 today.

As savvy long-term investors will know, times like these can present sound buying opportunities. Here are five reasons why Telstra is a compelling investment proposition today:

  1. Dividends. At $5.40, Telstra shares trade at a forecast dividend yield of 5.8% fully franked. That's an enormous 8.3% when we include the benefits of its franking credits.
  2. Cashed up. At 30 June 2015, Telstra had $1.4 billion of cash on its balance sheet. While that was down on last year, Telstra invested $5.1 billion in capital expenditure before investing a further $1.1 billion for new businesses. Put another way, Telstra spent the equivalent of 70% of the market capitalisation of its closest rival, TPG Telecom Ltd (ASX: TPM), in sustaining its business — in one year. Moreover, Telstra's war chest is growing. Payments from the lucrative NBN Co deal will bolster the $2.1 billion Telstra already makes in annual free cash flow.
  3. Asian growth. Telstra is embarking on an Asian expansion; a region it hopes will generate one-third of group revenue by 2020. Last year, the company generated just 4.8% of revenue outside Australia. To achieve its goal, Telstra is forming joint-venture (JV) agreements, investing heavily in data and infrastructure assets, and growing its digital offering.
  4. Fingers in many pies. Telstra is Australia's largest mobile and fixed data provider. However, Telstra is also Australia's largest pay-tv operator, through its Foxtel JV with News Corp (ASX: NWS); Australia's largest fixed data and voice provider; the most dominant eHealth business, and the leading network services provider. Telstra is also seeking to capitalise on the rise of Machine-to-Machine (M2M) communication.
  5. Valuation. Finally, at $5.40 per share, Telstra's valuation appears far more compelling than it did at $6.50. In my opinion, Telstra shares are well within their fair value range. And it seems analysts agree. According to those polled by the Wall Street Journal, Telstra shares are worth $5.77.

Buy, Hold or Sell?

At $5.40, Telstra is a good buy, but it's not great. While it is undoubtedly a very strong business, I'd like to start building a position in the $66 billion telco at around $5 per share.

And I'll happily wait until it reaches that share price because there are plenty of other compelling dividend stock ideas that are in bargain territory…

Motley Fool contributor Owen Raszkiewicz has no position in any stocks mentioned. Owen welcomes your feedback on Google plus (see below), LinkedIn or you can follow him on Twitter @ASXinvest. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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