Telstra Corporation Ltd (ASX: TLS) is already Australia's leading telecommunications company, but it's showing no sign of slowing down.
Here are three reasons to keep a close watch on Telstra shares in 2016:
1. Dividends
Telstra's dividend is currently forecast at 31.5 cents per share, fully franked over the 2016 financial year. At its current share price of $5.59, the telco is forecast to yield an impressive dividend of 5.63% fully franked or 8% grossed up. In a year with record-low interest rates, Telstra's reliable dividend yield could help keep it at the top of income-hungry investor's watchlists.
2. Reliability
Telstra's share price is down 14.7% year over year. That's not ideal. However, compared to the ASX's other 'safe' blue-chip dividend shares, like BHP Billiton Limited (ASX: BHP) and National Australia Bank Ltd. (ASX: NAB), that's not actually too bad. Telstra's incumbency and leadership in non-discretionary markets like mobiles, fixed broadband and more, affords it a higher level of perceived safety to other 'safe' blue chips, in my opinion.
3. Growth
In the year ahead, analysts are forecasting both profit and dividend per dividend growth from Telstra. In my opinion, Telstra's focus on Asia, cash windfall from the government's NBN Co, investments in emerging technologies and strong balance sheet should see the company modestly grow earnings over the medium-term. Telstra is no high-growth stock, but combining low single-digit growth with those lovely dividend yields should see the company beat the market.
Foolish Takeaway
Telstra is one of a few ASX blue chips I'd happily buy to hold for the long-term. However, it is currently priced to perfection and, therefore, does not present a compelling investment. Nonetheless, I've got Telstra shares plugged into my share watchlist for 2016 in the hope that it may fall in price and offer me a suitable entry point.
