3 reasons the Telstra (ASX:TLS) share price is storming higher

The Telstra Corporation Ltd (ASX:TLS) share price has been a strong performer this month. Here are 3 reasons its shares are storming higher

| More on:
rising ASX Telstra share price represented by man jumping in the air for joy looking at mobile phone

Image source: Getty Images

It was a positive day for the Telstra Corporation Ltd (ASX: TLS) share price on Monday.

The telco giant’s shares finished the day over 2% higher at $3.32.

This means the Telstra share price is now up 4.5% since the release of its half year results last week.

Three reasons the Telstra share price is climbing higher

The first reason the Telstra share price is pushing higher is its dividend.

Although there had been a number of hints that the company would maintain its dividend this year, some investors appeared to doubt this. Which is understandable given the downward trajectory its dividend has taken in recent years.

However, last week Telstra maintained its fully franked interim dividend at 8 cents per share and reiterated plans to do the same with its final dividend. This will mean a fully franked 16 cents per share dividend, which equates to a 4.8% yield.

The second reason

A second reason the Telstra share price is ascending is its positive outlook.

After years of earnings declines caused largely by the NBN rollout, the company is now setting itself growth targets once again.

CEO Andy Penn appears confident that the company is positioned to return to growth in FY 2022. He said: “I am confident the many initiatives we have taken under our T22 program, particularly in simplifying the business and the digitisation program, will further improve customer experience.”

“To get the real benefits from all the effort we’ve already made, Telstra needs to be bold. I’ve set an aspiration for mid to high single-digit growth in underlying EBITDA in FY22 and $7.5 to $8.5 billion of underlying EBITDA in FY23. I am confident we can deliver this if we remain focused,” he added.

The third reason

A third reason for the solid performance by the Telstra share price is the positive response to its results by brokers.

For example, analysts at Goldman Sachs retained their buy rating and lifted their price target on Telstra’s shares to $4.00.

Elsewhere, UBS retained its buy rating and $3.70 price target and Credit Suisse held firm with its outperform rating and $3.85 price target.

It is also worth noting that analysts at Macquarie briefly put an outperform rating and $4.00 price target on its shares before suspending coverage due to research restrictions. The broker is helping Telstra with its TowerCo sell-down.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

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. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Gainers