Why is Macquarie so bullish on Telstra shares?

This top broker foresees 11% share price growth over the next year.

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Key points
  • Telstra shares are up 0.84% to $4.18 apiece today 
  • Top broker Macquarie foresees 11% share price growth over the next year
  • The broker also forecasts a fully franked full-year dividend of 17 cents per share in FY23

Telstra Group Ltd (ASX: TLS) shares are in the green today, up 0.84% to $4.18 apiece.

Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is in the red, down 0.4% in late afternoon trading.

One top broker thinks Telstra stock has a ways to go, tipping 11% growth over the next year.

Let's find out why.

Concept image of a businessman riding a bull on an upwards arrow.

Image source: Getty Images

Top broker backs Telstra shares for 11% growth

As my Foolish colleague James reported yesterday, Macquarie has put Telstra at the top of its example income portfolio for new investors.

Macquarie has designed its 'model portfolio' to deliver higher earnings certainty, backed by strong cash flows and dividend income with franking credits.

So, Macquarie obviously thinks Telstra is the best stock pick for this criteria.

Telstra shares form the largest holding in the portfolio, with a weighting of 8.8%.

The broker has an outperform rating on the stock with a 12-month price target of $4.64.

And what about Telstra dividends?

Macquarie forecasts a fully franked full-year dividend of 17 cents per share in FY23.

Based on the current Telstra share price, this represents a dividend yield of 4.06%.

Speaking of dividends, if you want to grab the latest payout, you'll need to buy Telstra stock before the ex-dividend date of 1 March.

The telco will be paying a fully franked interim dividend of 8.5 cents per share on 31 March.

Another top broker, Goldman Sachs, is also bullish on Telstra stock.

After the company delivered its half-year earnings report last week, Goldman reiterated its buy rating and kept its 12-month price target at $4.60.

Goldman commented:

Telstra is tracking towards the top end of its FY23 EBITDA guidance range, given the strong 1H23 result and a range of sequential benefits in 2H …

Despite the stronger 2H, we expect an 8.5c DPS (67%/100% EPS/FCF payout) before growing to 9c in FY24.

Motley Fool contributor Bronwyn Allen has positions in Macquarie Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has positions in and has recommended Macquarie Group and Telstra Group. 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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