Expert says Telstra is a blue chip ASX 200 share to buy

Telstra could be an ASX 200 share to buy…

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If you’re looking to bolster your portfolio with some blue chip ASX 200 shares, then it could be worth considering telco giant Telstra Corporation Ltd (ASX: TLS).

Why is Telstra a blue chip ASX 200 share to buy?

Analysts have become bullish on this telco giant this year after its transformative T22 strategy delivered on expectations and underpinned a return to growth in FY 2022.

For example, commenting on its first half results earlier this year, the team at Morgans said:

TLS’s 1H22 result showed the second consecutive half of underlying growth, with underlying EBITDA up 5%, underlying EPS up substantially and the DPS flat yoy. Mobile was the star performer. Performance is tracking in the right direction and FY22 guidance was re-iterated.

And with the company’s T22 strategy soon to be replaced with the growth-focused T25 strategy, the company’s outlook is now arguably the best it has been in a decade.

This is particularly the case given the increasingly rational competition in the mobile market, the ongoing adoption of average revenue per user (ARPU)-boosting 5G internet by consumers, and its recent acquisition in the pacific.

Where are its shares heading to from here?

Morgans currently has an add rating and $4.56 price target on its shares. Based on the latest Telstra share price of $4.00, this implies potential upside of 14% for investors over the next 12 months.

But it gets even better for investors. Morgans continues to forecast fully franked dividends per share of 16 cents in both FY 2022 and FY 2023.

Based on where its shares are trading today, this will mean attractive 4% yields for investors in both years. This stretches the 12-month total return on offer with its shares to a sizeable 18%.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. 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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