The Telstra Corporation Ltd (ASX: TLS) share price will be on watch today.
This is after a number of analysts responded to its T25 strategy.
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What was the response?
One of those was Goldman Sachs, which appeared to be very pleased with the telco giant's T25 strategy.
According to a note released this morning, the key strategic and financial updates given with the strategy were consistent with the broker's prior expectations.
It commented: "FY25 targets for strong earnings growth were provided, implying a high degree of confidence in the outlook, given expectations for mid-single digit EBITDA growth p.a. and a similar quantum of mobile service revenue growth."
And while the broker notes that Telstra's earnings per share targets were slightly lower than it was forecasting, it wasn't enough to impact its bullish stance.
What about its dividend plans?
Goldman was also pleased with the company's new dividend policy.
It explained: "Telstra also revised its dividend policy back towards 100% of EPS, as it prioritizes growing franked dividends over time, while using the c.$600mn p.a. (c.5¢ps) of additional FCF to invest for growth or return to shareholders. On-market buybacks & un-franked dividends were highlighted, but we expect buybacks to be prioritized given the focus on growing franked dividends."
In light of this, the broker is now forecasting 16 cents per share fully franked dividends through to FY 2023. After which, it expects a dividend of 18 cents per share in FY 2024 and then 19 cents per share in FY 2025. Though, it sees upside potential to the latter dividends.
With the Telstra share price currently fetching $3.95, this will mean yields of 4%, 4.6%, and then 4.8%, respectively.
Is the Telstra share price good value?
The team at Goldman Sachs believe the Telstra share price is in the buy zone at present.
The note reveals that the broker has a buy rating and $4.40 price target on the telco giant's shares.
Based on the current Telstra share price, this implies potential upside of 11% over the next 12 months before dividends. And if you include them, the potential return stretches to 15.5%.
