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Does the Telstra dividend make it a blue-chip buy?

The Telstra Corporation Ltd (ASX: TLS) dividend has been a mainstay of ASX portfolios right across Australia.

The Telstra share price has also surprised many by outperforming the S&P/ASX 200 Index (INDEXASX: XJO) in 2019.

Telstra shares have climbed 29.60% higher this year to $3.59 per share, despite many people tipping a continued slump.

So, despite the 2019 recovery, does the Telstra dividend make the company’s shares a blue-chip buy?

Why the Telstra share price has struggled

One of the biggest factors affecting Telstra shares has been the rollout of the NBN network across Australia in recent years.

One ABC article on Tuesday reported Telstra chairman John Mullen slamming the high-speed network as “a waste of collective resources” that would “cost the country more than $50 billion”.

Mr Mullen called for action to reduce wholesale broadband pricing in Australia while acknowledging Telstra’s own faults.

The company’s share price has been under pressure since 2015 after a number of Telstra dividend cuts.

Difficult 2H18 trading conditions also saw the Telstra share price plummet to just $2.71, alongside many of the ASX 200’s top stocks.

Is the Telstra dividend a reason to buy Telstra shares?

Given the Aussie telco currently yields 2.79% per annum, I personally think Telstra is still a blue-chip ASX dividend stock.

With a market cap of $42.7 billion, Telstra is still hugely important to the ASX 200 as a large constituent.

When you consider the potential benefit of Telstra’s 5G network dominance, I think the Telstra dividend could see a resurgence in 2020.

While the company’s price-to-earnings ratio of 19.8x is a little pricey, I think there are genuine growth prospects to justify that.

With TPG Telecom Ltd (ASX: TPM) scrapping its 5G plans, Telstra could stand to gain a significant slice of the lucrative market.

Foolish takeaway

Despite its share price woes in recent years, I think the Telstra dividend makes it a good value buy in 2020, alongside these top ASX dividend stocks.

With further growth prospects and a 2.79% dividend yield on offer, it might be worth adding Telstra to your Christmas shopping list.

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Motley Fool contributor Kenneth Hall 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.