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Here’s where I would reinvest my dividends if I were a Telstra shareholder

If you’re one of the 1 million+ shareholders of Telstra Corporation Ltd (ASX: TLS), then today you’ll have received the telco giant’s 8 cents per share fully franked final dividend.

As Telstra is a favourite of income investors, I suspect many shareholders will be using these funds as a source of income to live from.

But for those shareholders that wish to reinvest these dividends into the share market, here are three shares I would buy with the funds:

Coles Group Ltd (ASX: COL)

Telstra shareholders that are looking for blue chips that provide a combination of growth and income might want to consider this supermarket giant. I think Coles is well-positioned to deliver solid total returns for investors over the next five years thanks to its refreshed strategy which is expected to deliver $1 billion in cumulative savings by FY 2023. Another positive is the company’s generous dividend policy which aims to pay out between 80% and 90% of its earnings to shareholders.

Nearmap Ltd (ASX: NEA)

If you’re considering putting these dividends into growth shares then I would suggest you take a look at Nearmap. Whilst it is a high risk investment option, I believe the risk/reward on offer from a long term investment is compelling. Nearmap is a leading aerial imagery technology and location data company. Its imagery allows its users to inspect, measure, or analyse locations from anywhere, which turns high-definition aerial map data into a powerful project management tool. Demand for its services has been growing at a rapid rate and looks set to increase further following the release of new products which could drive further strong customer and sales growth in the near term.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

If you’d like to turn these dividends into even more dividends then I think Sydney Airport would be worth considering. Although the domestic travel market has softened this year, I remain confident that this is only temporary and expect a rebound will come in 2020 and complement the ongoing growth in international visitors through the airport’s gates. I expect this to support solid income and dividend growth over the coming years. At present Sydney Airport’s shares offer a trailing 4.8% dividend yield.

And finally, if you're a value investors and interested in dirt cheap shares then you might want to consider putting the funds into these bargain buys.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. 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 Scott Phillips.

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