The Telstra Corporation Ltd (ASX: TLS) share price has been one of the most interesting ASX 200 blue chips to watch over the past decade. Telstra has undergone a remarkable transformation over this period.
One only has to look at the company's share price to see this in action:
We've seen the telco go as high as $6.60 (early 2015) and as low as $2.60 (mid-2018). The forces at play here were the loss of Telstra's old copper network to the national broadband network (NBN), which upended Telstra's old business model. We've also seen dividend cuts, and later dividend hikes. It's been a time.
Over this period, Telstra has had to deal with seemingly perpetual earnings declines. These have only stemmed in the past year or two. So now many investors might be asking if Telstra's worst days are now behind it?
The Telstra share price today — $3.85 — is well above the lows we saw in 2018. But it is also not even close to the highs it has commanded in the past.
So let's see what one expert reckons about Telstra today, and whether the company's best days lie in front of it.
Justin Braitling is chief investment officer at Watermark Funds Management. He recently spoke to Livewire about Telstra and its fellow in the telco space, TPG Telecom Ltd (ASX: TPG).
Are Telstra shares returning to growth?
To start with, Braitling reckons investors should be "on the hunt for 'cheap defensive shares', particularly those that have underperformed in recent years". That certainly sums the Telstra share price up over the past decade.
Here's what Braitling had to say on both Telstra and TPG:
[Telstra] and [TPG] are both well priced here…
All the headwinds that have challenged TLS (NBN, mobile substitution, legacy deflation) are behind them. The business is growing again. Meanwhile, TPG is outstanding value here. The commitment of the founding shareholder is unclear, which I suspect puts this business in play at these depressed levels.
So 'Telstra growing again' might just be what investors want to hear. It's certainly a phrase that not too many investors have said alongside the Telstra name in recent years. But equally a phrase that shareholders will be very excited to hear today.
At the current Telstra share price, the ASX 200 telco has a dividend yield of 4.3%
